What companies are good new? 75% mortgage but own 100% how does it work?

davilown

Looked at loads of houses today - none anything special apart from two. Ist is a brand new David Wilson home and the 2nd is a morris homes.

HAs anyone had any good/bad experience with these companies?

Morris homes are offering Pay 75% but own 100%. How does this work and is it any good? Is there still a limit on what you can borrow?

Cheers

:beer: monster

distilled

Both are reputable builders. If you go for the shared equity scheme, when you sell you will have to repay the 25%. Depending on the terms of the contract, that could be the original 25% or more likely, 25% of the resale value. Its a tool for first time buyers to help you get a foot on the ladder. The 25% could even be repayable after a set period whether you sell or not

Andrewsmith will no doubt advise you on the mortgage side. He's a top bloke!

davilown

distilled wrote:

Both are reputable builders. If you go for the shared equity scheme, when you sell you will have to repay the 25%. Depending on the terms of the contract, that could be the original 25% or more likely, 25% of the resale value. Its a tool for first time buyers to help you get a foot on the ladder.

Andrewsmith will no doubt advise you on the mortgage side. He's a top bloke!

So would it be a good idea? If I could go for one of these, the houses are much nicer and in a better are.
couldn't agree more with you about andrew - hopefully he's out there somewhere!

:beer: monster

distilled

Its not an ideal situation but if it helps to to buy a new home..... On a personal level, Morris are better! (Don't tell David Wilson!) He actually does exist. Good luck

AndrewSmith

Blimey, thanks for the compliments you guys. I try my best.

Shared Equity is excatly as it states in the name. You and the builder own a portion of the property each, with conditions attached to the equity held by the builder.

Sometimes the builder will simply state, as Distilled says, we will take 'x'% of the value when you sell. I have known it however where the builders have a caveat in the contract which forces compulsory purchase of the remaining %ge after, say, 5 years. This caught a friend of mine out a few years ago. He couldnt afford to purchase the extra %'ge and had to sell to get out of the contract. In both cases though you will find that the Builder will register a second charge against the property for the amount he owns. This will stop you from not paying him his share if you sell.

There are a number of lenders happy to look at Shared Equity however before looking for a mortgage product or rate you would need to know the exact terms of the contract involved, as this could change the number of lenders willing to proceed on certain conditions.

Ask Morris homes for a copy of their Shared Equity contract. Tell them you want to look into it with a Legal advisor before committing time or money.

What sort of figures are we looking at for the 25/75 with Morris Builders?


Hope this helps

Andy

davilown

AndrewSmith wrote:

Blimey, thanks for the compliments you guys. I try my best.

Shared Equity is excatly as it states in the name. You and the builder own a portion of the property each, with conditions attached to the equity held by the builder.

Sometimes the builder will simply state, as Distilled says, we will take 'x'% of the value when you sell. I have known it however where the builders have a caveat in the contract which forces compulsory purchase of the remaining %ge after, say, 5 years. This caught a friend of mine out a few years ago. He couldnt afford to purchase the extra %'ge and had to sell to get out of the contract. In both cases though you will find that the Builder will register a second charge against the property for the amount he owns. This will stop you from not paying him his share if you sell.

There are a number of lenders happy to look at Shared Equity however before looking for a mortgage product or rate you would need to know the exact terms of the contract involved, as this could change the number of lenders willing to proceed on certain conditions.

Ask Morris homes for a copy of their Shared Equity contract. Tell them you want to look into it with a Legal advisor before committing time or money.

What sort of figures are we looking at for the 25/75 with Morris Builders?


Hope this helps

Andy

Hi Andrew, Thanks for the fast reply.

The houses are between 162k - 170k. The contract, although i have not yet seen it is repay at ten year point or if seeling before, repay then.
The main proble is would the bank/building society look at the mortgage you could take out with regards to pay for the whole house price or just the 75%?

Cheers again

dave

AndrewSmith

Ok,

Sorry for the delay in replying, just finished tying up a purchase deal for a client with an estate agent. Also just spoken to a lender regarding your question.

Here's how it works.

You apply for a mortgage based on the FULL price, with the mortgage being your 75% share. They will lend 100% of your 75% share however you must demonstrate that you have cash funds of 3% of your share even though it is not used.

Example:

Full price £165,000
Your Share £123,750
Proveable cash funds needed £3,712

The lender will then lend you the full £123,750 based on a purchase price of £165,000, and you have the pick of all their product range (subject to status and underwriting of course)

Hope this helps?

Andy

davilown

AndrewSmith wrote:

Ok,

Sorry for the delay in replying, just finished tying up a purchase deal for a client with an estate agent. Also just spoken to a lender regarding your question.

Here's how it works.

You apply for a mortgage based on the FULL price, with the mortgage being your 75% share. They will lend 100% of your 75% share however you must demonstrate that you have cash funds of 3% of your share even though it is not used.

Example:

Full price £165,000
Your Share £123,750
Proveable cash funds needed £3,712

The lender will then lend you the full £123,750 based on a purchase price of £165,000, and you have the pick of all their product range (subject to status and underwriting of course)

Hope this helps?

Andy

Hi andy

Would the lsap be provable as cash funds?
Cheers
Dave

AndrewSmith

Hi Dave,

Just spoken to the same lender who said yes, the LSAP can be acceptable as the 3&, as long as you have the Paymaster General confirmation that you have been granted it.

Andy

davilown

Andy

As usual

Thank you!

Dave