shared ownership remortgage advice?

deputyeditor

Hi,
I've just registered on this site and don't know the drill, so bear with me.
I came across this forum while researching to help a predicament relating to a shared ownership remortgage. We bought our Victorian terrace home in London on the open market in 1994 - we bought 75%, the remaining 25% owned by a housing association. We pay rent for this.
The bottom line is that I believe we're being subjected to unfair treatment in the form of not being able to hunt around mortgage lenders for the best deal because our home is shared ownership. This is costing us thousands of pounds a year and I'm wondering if anyone has any suggetions?
To explain:
During the 15 years we've (part) owned our home, we have never defaulted on mortgage/ rent or any other form of borrowing. I am a professional person in well paid employment - just so you have the picture.
This was a scheme called diy shared ownership - I don't even think this permutation of shared ownership exists anymore. I was not made aware at the time of any problems/ restrictions relating to additional borrowing against the house at the time. The house was in quite run down condition and over the past 14 and a half years we have spent lots of money on the house - around £41,000, approx half of this essential maintenance and half improvements. Funding this has consistently proved a problem due to restrictions/red tape relating to the property.
By early 2007, the dribs and drabs of money we had borrowed in the form of loans from various lenders was adding up to daft amounts of outlay at silly interest rates every month. I'm not great with money, but realised I was paying out way more on a monthly basis than I should be, so I made an appointment with an IFA. He advised me to consolidate these borrowings by extending our relatively small mortgage to a mortgage that was still well under three times my salary. By this time, we also owned more than 50% of the value of the property in equity. He said it would be no problem at all under these conditions, and undertook to arrange it for us. No luck - whatever he did, he came up against a wall because no lender would agree to lend to us. The Housing Association refused to extend something called a Mortgage Protection Clause on additional borrowing, making it impossible to borrow even though much of the money had been spent on essential works to a property they part owned.
I can't tell you how stressful the whole thing was - I've never once defaulted on anything, had a £50K salary and £200,000 in equity on my property - but was being treated as a second class citizen simply because the property is shared ownership. I'm also worried that the loans being turned down could have adversely affected my credit rating, which I would assume is otherwise pretty top notch. Eventually I found a lender who would lend us a remortgage of £141,000 without the MPC - Kent Reliance - but at 6.8 per cent for a five year fixed rate deal. This is way over the odds for other deals out there - especially now the interest rate has gone down. I have worked out that I could easily be saving £500 - £600 a month on a better deal.
Is there anything I can do? I feel this blanket policy of the Housing Association not to extend an MPC for further borrowing is highly unfair. Surely every situation should be treated on its own merits? I can understand the HA not wanting to encourage people to over-borrow, but that is not our situation.
Sorry to bang on - I'd love to be able to hunt around for a better deal, and also believe the HA should compensate me for the money I've lost as a result of their senseless rule. I'd really appreciate any guidance.

allybally_3

Hi

I sympathise entirely. However, there may be light for you. I am presently going through the remortgage process and despite finding a lender (Halifax) who is prepared to lend upto 75% of the value of the share without the MPC, and receiving the mortgage offer, the council who own my share won't even agree to underwrite this remortgage.
In effect it looks like I will lose my mortgage offer due to my leaseholders unreasonble terms -
a - my lease not having an MPC
b - my leaseholder not being prepared to sign a section 442 (I have no idea what this is)
c - my leaseholder not being prepared to sign an undertaking that they would notify Halifax in the event of a repossession

I suggest you apply to the Halifax and keep your fingers crossed that your leaseholder isn't as draconian as mine

Good luck :-)