New Sub Prime Mortgage?

andyauk

Hi All

Wonder if anyone has any thoughts on the following

We are keen to move home as we have simply outgrown our current house.

We currently have a Mortgage with First National for £74K Our current house is Valued at approx £85K (this is priced to sell in the current market) however there is a £5K redemption penalty on our current mortgage. Our Broker has advised that a mortgage of 90% is doable with GE Money who own First National but they will not waive the redemption penalty.

We are proposing to buy a new build for £175K which is affordable our outgoings are quite small approx £500 apart from the mortgage and our take home pay is £4K minimum each month.

The problem is that we do not have sufficent equity/deposit for a mortgage as we would need a sub prime mortgage due to previous problems (we were on a DMP for sometime). However the developer is offering 15% of the purchase price as an interest free loan for 10 years which we could use as a deposit - is this a workable solution?

Cheers

Rabiddog_2

Sounds good....

minimike2

Thats whats called shared equity. Last time I enquired with First National about this they said they do not accept these schems so I wouldnt get your hopes up.

_Andy_

Yep FN certainly don't - see

http://www.firstnat.co.uk/intermediaries/mortgageIntermediaries/pdf/1044.pdf

andyauk

thanks for the responses, the way the developer explained this it was nor a shared equity scheme but a loan, but the again I suppose how would they guarentee their loan unless it was secured somehow?

I'll ask the developer to explain in greater detail

Do you know of a lender who would look at this?

justme123_3

Hi the halifax and the nationwide both accept these schemes

minimike2

I highyl doubt that they would just do it as an unsecured loan.

Even if they did, you would still have to declared to the lender what the source of the deposit is - they are not likeley to be happy with it and all that will happen is they would tell the valuer to downvalue the house by an amount equal to the amount of the "loan", because all they would do would be to add it on to the price.