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Shared equity mortgage help
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coffeebreak_2
Posts: 16 Forumite
Hello,
I have found lots of useful information on these forums before but this is my first post so please be gentle with me!! And I'm sorry if it's long...
In December last year I went to see a mortgage broker and obtained an agreement in principle (the lender being Natwest) with no problems. I found a house (new build) I liked on the shared equity scheme however was told that my agreement wouldn't stand as it wasn't for shared equity mortgages and that I needed to get a new one.
I was referred to a different broker by the developer who told me that because the development was nearing the end there were only three lenders left that would lend to it (and one of them had shocking rates!). He suggested going with Nationwide, however the application had to be deferred to head office and has come back rejected! I am absolutely gutted and cannot understand why, especially after Natwest accepted me last year! I have a £30K deposit and my earn enough to be able to get the mortgage I want. I have a good credit history too and never miss payments.
My mortgage broker tells me that I have been declined due to a 'financial association'. I rent with somebody at the moment who has had debt in the past, however we do not share any financial connections. All money is kept separate and although both names appear on bills, we do not share any bank accounts, credit cards, etc, nor have we applied for anything jointly. I obtained my credit report end of last year and there were no other names on there. Nationwide have told me to check experian, so I've ordered another report to try and work out what they don't like.
There is one last lender to try and if they come back with the same decision then I will have lost this house. It just doesn't seem fair! This is my house with my money and nobody elses. Any help appreciated - I'm worried that this is going to affect me in the long term.
Thanks for reading.
I have found lots of useful information on these forums before but this is my first post so please be gentle with me!! And I'm sorry if it's long...
In December last year I went to see a mortgage broker and obtained an agreement in principle (the lender being Natwest) with no problems. I found a house (new build) I liked on the shared equity scheme however was told that my agreement wouldn't stand as it wasn't for shared equity mortgages and that I needed to get a new one.
I was referred to a different broker by the developer who told me that because the development was nearing the end there were only three lenders left that would lend to it (and one of them had shocking rates!). He suggested going with Nationwide, however the application had to be deferred to head office and has come back rejected! I am absolutely gutted and cannot understand why, especially after Natwest accepted me last year! I have a £30K deposit and my earn enough to be able to get the mortgage I want. I have a good credit history too and never miss payments.
My mortgage broker tells me that I have been declined due to a 'financial association'. I rent with somebody at the moment who has had debt in the past, however we do not share any financial connections. All money is kept separate and although both names appear on bills, we do not share any bank accounts, credit cards, etc, nor have we applied for anything jointly. I obtained my credit report end of last year and there were no other names on there. Nationwide have told me to check experian, so I've ordered another report to try and work out what they don't like.
There is one last lender to try and if they come back with the same decision then I will have lost this house. It just doesn't seem fair! This is my house with my money and nobody elses. Any help appreciated - I'm worried that this is going to affect me in the long term.
Thanks for reading.
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Comments
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check all 3 agencies? http://www.moneysavingexpert.com/loans/credit-rating-credit-score#files
there may be an error somewhere.
renting "with" somebody - joint application ?0 -
Yes, both our names appear on the tenancy agreement but this didn't show up on my equifax credit report but will see if it's on experian. What is the third one?0
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on the link, hit (see the officially checking credit files note).0
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Sorry! Missed that bit. Thanks for your help.0
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Quick update - checked one of my credit reports and I've been associated with somebody I've never been financially linked with so am in the process of getting a disassociation. Anybody know how long this takes and how long I will have to wait until I can try and get an agreement in principle again?0
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The incorrect financial link has been off my reports. Equifax took about four days, Experian took a little longer but still turned it around in less than two weeks. Can I reapply for an agreement in principle again now? Should I go back to Nationwide or do you suggest going to another lender?0
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There's a good reason for that. Shared ownership is a scam. If the banks are sensible enough not to want to risk their money on such a con, then that should be a warning sign for you. Run!coffeebreak wrote: »I was referred to a different broker by the developer who told me that because the development was nearing the end there were only three lenders left that would lend to it (and one of them had shocking rates!).poppy100 -
The real problem with shared ownership is the exit plan.
A lot of people don't have one(or think they do but it is flawed).
Selling can become an issue especialy where there are "criteria" that are set by other people.
To buy your way out you need to increase income or get a lump sum or allready be able to aford the place but it is cheaper to do it(rent is cheaper than the mortgage).0 -
There's a good reason for that. Shared ownership is a scam. If the banks are sensible enough not to want to risk their money on such a con, then that should be a warning sign for you. Run!
Is shared equity as bad as shared ownership? It seems like such a good scheme. I would be buying 75% and the developer would put in the remaining 25%, which I buy off them after 10 years (or before). Deposit isn't an issue but with the mortgage I can get it limits the type of house I can get. I had been looking at two bed terraces, which realistically I'd only want to stay in for three years or so. With this scheme I can get a four bedroom house with garden and parking that I can see myself living in long term. However I don't want to be scammed!!0 -
coffeebreak wrote: »Is shared equity as bad as shared ownership? It seems like such a good scheme. I would be buying 75% and the developer would put in the remaining 25%, which I buy off them after 10 years (or before).
- First of all the prices of shared equity scheme properties is often inflated compared to what you would get on the open market. Without SO/SE schemes to prop up prices, developers would be forced to slash their asking prices to realistic levels to attract interest. So the '75%' that you are putting in might actually be closer to 90-100% of the true value of the property if it were on the open market.
- Secondly, the developer is not 'putting in the remaining 25%'. They are the vendors, they are not paying any money to themselves. Instead all that is happening is that rather than borrowing that 25% from the bank in the form of a larger mortgage, you are borrowing it from the developer in the form of an 'equity loan'. You still pay and owe the same amount overall, you are just deferring the repayment of 25% of that amount for five years. Nobody is giving you free money here, or subsidising the cost of the house. You are still taking on 100% of the debt.
- Shared equity schemes, despite stating that 'you own 100% of the property', often impose onerous restrictions on what you can do with your own house. For example, most schemes say you can not rent out the house without written permission, and even then you can only rent it out for a certain period of time (unless you pay off the equity loan in full). Thus, if you fall into difficulties paying the mortgage through illness or a relationship breakup, or if you need to move out of the area for a job opportunity, it will be hard/impossible for you to rent out the house to cover the mortgage payments.
- Equally, when it comes to selling your house, most schemes place restrictions on who you can sell to. Most will require you to use their 'independent surveyor' to get a valuation, and will then have a 6-8 week exclusive marketing period during which the property will be offered to applicants on their waiting list at that value, even if you think it is too low.
- If prices do boom again and you want to remortgage to release some equity, you will not be able to do so until and unless you have paid off the equity loan in full. Even if you want to remortgage without releasing equity (e.g. if you want to move to another lender with a lower rate), you will need written permission from the Homebuy Direct scheme operator.
- You will not be able to extend or make structural alterations to your home (which you 'own 100%') without written permission from the Homebuy Direct scheme operator, which is usually not granted.
- If you get a new partner and want them to move in with you (into the house which 'you own 100%'), again you need permission from the scheme operator.
Basically you get all the restrictions of renting, along with all the hassles and costs of owning. It's a complete scam, and if you read this board regularly you will come across many victims who are in dire straits as a result.
Have a look:
poppy100
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