Mortgages and affordable housing

Cornish_piskie

Hi

I'm currently in the process of buying a new home (still being built at present). It's subject to a Section 106 - affordable housing for locals or keyworkers in certain services. Other than this it is a completely normal sale, I'm buying it outright from the developer so it isn't a council scheme nor is it a 'part-buy/part rent' scheme. My conveyancing solicitor has advised me to ensure the lender or mortgage broker is aware that this is an 'affordable home' so that they are aware of the Section 106 status and it's restrictions for future resale.

I just wondered if anyone else had any experience in gaining a mortgage for an affordable home and whether my options will be restricted mortgage-wise. I suppose my biggest concern is that I will be 'penalised' by a lender with a higher rate or perhaps arrangement fee

Thanks in advance for any replies

bear1969

I'm buying it outright from the developer


so why do you need a mortgage ?

opinions4u

bear1969 wrote: »

I'm buying it outright from the developer


so why do you need a mortgage ?

I think the OP means that they are buying the whole property, rather than a shared ownership (e.g. 50/50) / Homebuy (80/20) type arrangement where a housing association / builder will retain ownership of the rest.

getmore4less

No idea on the mortgage but resale would be my main concern.

Is there an obvious pool of "key workers" that will be eligable.

Many seem to be public services and recruitment which is where new buyers are likely to come from might be on the down turn for those groups.

ook

We bought an affordable house with a 106 agreement about 4 years ago (we are in Cornwall as well!). You must tell the lender about the 106 agreemet. At the time we found very few lenders that would give us a mortgage when we mentioned the 106 agreement (I don't why), which made finding a mortgage a bit of nightmare. The ones that would lend were HSBC, Abbey and Standard Life (but there is probably more willing to take them on now as they are getting more common).

Unfortunately, we didn't get anywhere with mortgage brokers, but eventually we went with Standard Life at the time with a 5 year fixed 5.1%, as they were only lenders who would lend us enough on our wages and with a 106 agreement.

Hope this helps, and good luck!

blueboy2001

Skipton BS and Nationwide will lend on properties with occupancy restrictions too. Lenders attitude tends to be they will lend on their normal terms or they won't touch them.

Sometimes it depends on the precise clauses in the S106 agreement - more recent agreements are more likely to include clauses that protect mortgagees in possession and allow them to sell the property without the restrictions after a short period to allow them to get their capital back.

Lenders will usually want a copy of the S106 and will pass it to the underwriter before deciding if they will lend.

Is the property affordable in perpetuity - ie. do you have to pass on the discount should you sell the property on? This can have a bearing too.

Liz33

Leeds building society, abbey, halifax, Nationwide, HSBC, Kent Reliance, Woolwich all lend on shared ownership with S106, they normally ask to see a copy of this which the vendor should be able to give you so I assume they would also lend on outright also