Refused mortgage from Leeds on part buy part rent scheme..what next?

jgallcash

Yasmina wrote: »

If a mortgage application is declined, does that count as another black mark on your credit report, and take you back to sq 1?

my initial feeling on this is it will show up as a search. I would suggest talking to Leeds and asking them if this is the case.

Yasmina, are you using a financial advisor to find a mortgage?

poppy10_2

Bargain_Rzl wrote: »

But if I'd been renting for the 2.5 years I've had the flat, I'd have shelled out over £20k in rent

How much have you shelled out in interest payments, rent and service charges over the last 2.5 years?

poppy10_2

Yasmina wrote: »

If a mortgage application is declined, does that count as another black mark on your credit report, and take you back to sq 1?

Most mortgage lenders will ask you if you have ever had a mortgage application refused in the past. Best to do your homework thoroughly and make sure you've got a good chance before proceeding with an application.

Yasmina

Hi

An adviser.

But I did call Woolwich myself, after Leeds refused me (the adviser told me that Leeds refused).

Yasmina

No mortgage apps refused in the past, no late loan payments or CCJs or anything.

Just literally the late catalogue ones.

I would have thought with earning £34,000, and the mortgage being £66,000, it would not be this hard.

AMILLIONDOLLARS

robin_banks wrote: »

I too was offered a shared ownership scheme, and applied to the Leeds who subsequently valued the flat £35000 less than Notting Hill Housing Association.

We pulled out, had we done our homework we'd never have bothered applying.

Shared ownership is madness.

You've had a lucky break here, the combined rent, mortgage and service charge would cripple you.

This valuation would have worked in your favour! - you should have gone back to renegotiate. Before my daughter put herself forward for the one she is now buying, we asked the person in charge if the valuation came in low what would happen. We were told it would go before the head of the Association for his/her consideration, and like any other seller they would decide whether to proceed at the new valuation or not. In this market they would be stupid not to, as the whole point of this scheme is to get first-timer buyers on the first rung, either that or have loads of property unsold.

And don't forget it works both ways, once property prices start to raise, you'll have to buy your increase in share at the new price. so swings and roundabout.

AMD

PS. My daughter mortgage will be with the Leeds so watch this space for the outcome.

Dan_1976

Most lenders will want an A+ score on any shared ownership, equity or whatever the scheme is called.

The only lender that was not has gone under!

Bargain_Rzl

poppy10 wrote: »

How much have you shelled out in interest payments, rent and service charges over the last 2.5 years?

Rent over 2.5 years has cost me approx £6900, an average of £230 a month over 30 months.

Mortgage interest is really difficult to calculate as I have been overpaying the mortgage throughout this time. effectively offsetting my savings against it. But had I stuck to my basic minimum monthly payment I would have averaged about £280 a month in mortgage payments which would have reduced my capital by about, what, £3000? (really rough estimate here) so about £5400 in interest.

That's £12300 in rent and interest over 2.5 years. The share I own in my flat has lost about £4k in value since purchase date (according to the Nationwide calculator).

Service charges have been in the order of £2400 over those 30 months.

That's a total of £18,700 "into thin air". To rent an equivalent 1-bedroom flat in my area I would be looking at £700 a month or £21000 over 30 months.

So I'm more than breaking even in my view.

haziec

Dan_1976 wrote: »

Most lenders will want an A+ score on any shared ownership, equity or whatever the scheme is called.

The only lender that was not has gone under!

I have heard (someone correct me if wrong!) that the Halifax at least credit scores these applications as though the person is borrowing 100% thus disregarding the part of the purchase that is funding by the scheme.

I agree with the OP on here that you need to see an IFA for some advice, rather than keep getting searches on your credit file.
Martin has got some useful advice on MSE regarding credit scoring etc.
Good luck

haziec

Bargain_Rzl wrote: »

I am a shared owner myself (40%) and have posted on here in detail about the pros and cons. Do a search for my posts on the subject as I believe they take a pretty balanced view.

There are multiple inherent disadvantages to being a shared owner, and you just have to decide whether these are outweighed by the advantages you stand to gain from the scheme you buy into. IMHO these advantages are likely to be far fewer in a falling market than in a rising one.

Having a mortgage+rent+service charge is not inherently crippling. It's only crippling if it's more expensive than the alternatives. I am a single householder on an average salary and have a small flat in London (i.e. considering a smaller, cheaper property wasn't an option, as I'm already at the bottom end of the scale) which costs me considerably less than either buying outright or renting would have done. This has given me the freedom to accelerate the repayment of my mortgage and in 2.5 years I have cleared well over a fifth of the original loan. I'm going to talk to the Nationwide (my current lender) next week about the possibility of going onto a 5-year fixed rate - if I continue to make overpayments, and if a couple of small investments of mine come through on target, there is a good chance I will clear the mortgage completely by the end of those five years. How I move on after that (whether to buy a greater share, or stay as I am with a low rent, or sell it on and move elsewhere) is still very much under consideration. If I do buy the remainder and take on a new mortgage for it, I'll automatically start off with 40% equity...

Similarly, an experience like the one Robin Banks has described is not inherently the case with shared ownership properties either. Yes, the fact that SO properties tend to be newbuilds mean that they are likely to be overvalued from the word go, but that doesn't mean that every single one is. The value of mine was set at a rate that was comparable to the lower end of similar properties on the open market at the time. If it had been overvalued, I wouldn't have touched it with a barge pole.

Yes, the value of my flat will have dropped over the past couple of years like everybody else's. But if I'd been renting for the 2.5 years I've had the flat, I'd have shelled out over £20k in rent - which is less than the amount that my flat has devalued. In that time I have had a pleasant and secure home which I can easily afford.

excellent, balanced post, thank you for putting it on here and well done for paying off so much, what an inspiration!