Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Zimbidug
    • By Zimbidug 11th Oct 16, 9:19 PM
    • 2Posts
    • 0Thanks
    Zimbidug
    Mortgage Lenders and Restrictive Covenants
    • #1
    • 11th Oct 16, 9:19 PM
    Mortgage Lenders and Restrictive Covenants 11th Oct 16 at 9:19 PM
    Hi there,

    I am looking into buying an ex-local Authority property which has a Restrictive Covenant on its Title Deeds. This states that the potential purchaser must have lived or worked in the area for the 3 years previous. This is all fine, and we meet this criteria, only we had a meeting with Barclays today who point blank said they would not lend to us because of this covenant.

    The advisor did say that Barclays are extremely risk averse, so I'm hoping this isn't what all mortgage lenders will say - how else do people buy these houses?!

    Has anyone had experience for this, and ideally, knows which mortgage companies will lend despite this restriction?

    Thanks!
Page 1
    • G_M
    • By G_M 11th Oct 16, 9:29 PM
    • 37,080 Posts
    • 41,032 Thanks
    G_M
    • #2
    • 11th Oct 16, 9:29 PM
    • #2
    • 11th Oct 16, 9:29 PM
    The problem for Barclays (and any lender) is that if you default on the mortgage, and they repossess, they cannot sell easily to get back the loan. They have to find someone else who "must have lived or worked in the area for the 3 years previous" and this may mean they are stuck with the property for some time.

    Whether other lenders will be so cautious, an Independant mortgage Broker should know.
    • Richard Webster
    • By Richard Webster 12th Oct 16, 3:50 PM
    • 7,326 Posts
    • 6,986 Thanks
    Richard Webster
    • #3
    • 12th Oct 16, 3:50 PM
    • #3
    • 12th Oct 16, 3:50 PM
    If there is a market for such houses at a lower rate than similar houses without the restriction then a lender should lend assuming the lower valuation. Nobody is going to lend a high amount if you are paying a similar price to that for a house without the restriction.

    I had this happen years ago and Chelsea wouldn't lend but Halifax would. Whether they will now I don't know.
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
    • Zimbidug
    • By Zimbidug 12th Oct 16, 4:46 PM
    • 2 Posts
    • 0 Thanks
    Zimbidug
    • #4
    • 12th Oct 16, 4:46 PM
    • #4
    • 12th Oct 16, 4:46 PM
    The valuation of the property does reflect the restriction, so it seems strange that a bank wouldn't lend.
    I am now in touch with an independent mortgage advisor, and look into Halifax...

    Thanks!
    • Richard Webster
    • By Richard Webster 13th Oct 16, 2:44 PM
    • 7,326 Posts
    • 6,986 Thanks
    Richard Webster
    • #5
    • 13th Oct 16, 2:44 PM
    • #5
    • 13th Oct 16, 2:44 PM
    I think the problem lenders have is whether there is a ready market with a fairly reliable level of discount.

    If there are quite a lot of houses locally with similar restrictions then they will change hands often and local estate agents and surveyors will know the level of discount to be applied and this will be reflected in the actual sale prices. If there are very few it will be more difficult for a valuer to be certain of his valuation.

    That's the logic of the situation, but regrettably, lenders are not very logical about these things.
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,127Posts Today

6,046Users online

Martin's Twitter