who is lending money for a 106 agreement?

angerog

Hello,
has anyone any info or advice or guidance on WHO will lend money for a 106 agreement (apart from the Halifax)
The story so far............
the restrictions are unworkable and have gone back and have been revised from £100,000 to £120,000 which is STILL unworkable ( the Halifax will lend once it is up to roof height)
ANY guidance for getting round the restrictions/clauses would be most helpfull
cheers
ange

Conrad

Sorry I've not heard of a 106, what is it?

Also you say the restrictions are unworkable. What does this mean, what restrictions?
Is this a property to live in, a farm, a business?

toonfish

what is the 106 Agreement requiring you to do as part of the build?

No-one is going to lend specifically for it, it's got no secutrity for the lender. you will need to factor it in to the total cost with someone like TMB who will lend in advance.

angerog

hello
couple have plot of land with full planning in place
but no money to build it themselves so need a morgage
the clauses set by the local council are to do with resale / affordable housing so in effect if they fail on repaying morgage it goes onto market at £120,000 but the reality is it will probably cost £150 to build it in the first place
Is this a regional thing going on here ? the plot of land is in Cornwall and the council in question is NCDC (North Cornwall District Council)
so that is what i meant by unworkable..........the Halifax say they will get involved once they are up to roof height

angerog

Toonfish
sorry but am not sure what abbs. mean
TMB ??

HelpWhereIcan

Conrad wrote: »

Sorry I've not heard of a 106, what is it?

http://www.idea.gov.uk/idk/core/page.do?pageId=71631

angerog wrote: »

... the clauses set by the local council are to do with resale / affordable housing so in effect if they fail on repaying morgage it goes onto market at £120,000 but the reality is it will probably cost £150 to build it in the first place

You have to understand that any restriction on the lender being able to repossess and sell for as much as they can to secure the debt will cause a problem.

You may find that, if the max sale price would be £120,000, any lender would base the amount that can be borrowed on that figure ... so I would not be suprised if the Halifax are actually saying that they will lend no more than say £108,000 and that the borrowers have to raise the extra £42,000.

angerog wrote: »

Is this a regional thing going on here ? the plot of land is in Cornwall and the council in question is NCDC (North Cornwall District Council)

Probably, other councils will apply restrictions to planning permission based on low cost housing policy, but I would suspect that those in Devon & Cornwall would be more likely than most.

angerog wrote: »

so that is what i meant by unworkable..........the Halifax say they will get involved once they are up to roof height

The stages set are important and, as toonfish says, some lenders like TMB (The Mortgage Business) will agree advance stages. However, as I said I suspect that you will still have the same problem with every lender when they look at the max valuation that the property can be sold for on repossession and that you will have real difficulty in finding someone willing to lend anywehere near the £150,000 build cost.

Hope I am wrong though

kkgree1

I am not familiar with the 106 agreement but I have restrictions on who I can borrow with because of the clause in our lease on a council shared-equity property.
We could only get a mortgage with one of three lenders - Halifax, Nationwide or Cambridge Building Society. We found the local building society to be the best as they were aware of the situation with these clauses.