Halifax decline on policy reasons - New Build - 85% - 15% shared equity. Help Please

aj+2

Hi,

I applied for a First time buyer mortgage via broker and was initially declined by nationwide but accepted by Halifax via broker with new build 85%, 15% Shared equity scheme with a 5% deposit. After 4 long weeks of waiting I was declined due to Policy reasons that halifax would not go into.

I had a B pass rate on credit and survey and all was fine.

A: can somebody please shed some light on policy reasons (broker said something about secured loans but he said he does not understand)?

B: I asked halifax if I brought the house with out the shared equity could I reapply with a 10% deposit and was told yes. Please can someone tell me if this is the case or is there a better avenue to go down.

HELP HELP HELP HELP please.

GMS

There are restrictive covenants involved in shared equity schemes which mean the lender would struggle to repossess if necessary.

The builder would have a charge on the property which the lender will not allow.

This has been mentioned before on here. Unlikely to find a willing lender.

Double check with Halifax regarding a 10% deposit mortgage. New builds are generally 80% max.

Have you tried looking for a non new build. Much easier to complete on

ztan

I would push them to find out why... Is your shared equity deal through a developer? If so... how come they are not finding your mortgage for you?

I am 4 weeks into living in my shared equity purchase, and we're on 80-20 with a 5% deposit... House value £150,000- deposit £7,500- mortgage £112,700- second interest loan £30,000.
Our mortgage provider is Halifax, but this mortgage was found for us by a broker, provided and paid for by the developer. We were able to look for our own deal if we wanted, but because of terms and conditions, shared equity properties can be difficult to mortgage. Once mortgaged, your home and safe.

Ours is also a new build... shared equity is rarely offered on older homes.

Like I said, really push for the information, and find out more from your developer. If they're any good, they should be supporting you.

opinions4u

The previous case reported on here was very similar.

It seems that the builder had basically put a requirement in to the contract the meant the lender couldn't repossess without the builder's agreement.

No mortgage lender can operate on that basis.

overlander

They have done you a favor stay well away from shared schemes. Just sit tight and save, soon enough the house will lose the equivalent of the shared equity and you can buy outright with a 20% deposit.

ztan

PLEASE ignore the grouchoes on here who slate shared equity... they're wrong and they're confusing it with shared ownership.

Please check out my thread in Mortgage Free Wannabe, which will tell you all about my Shared Equity Experience.

aj+2

Hi all,

thank you for your replies, I have asked Halifax again why they declined and get the same answer - due to policy reasons which they cannot go into. I am at my wits end and dont know where to turn. Do I just give up the fight and settle for a second hand house (which I wont love as much or go back to developers and ask if there is any alternative.

P.S. the equity scheme is via the developer.

ztan

I'd go to your developer and ask them if they can recommend a mortgage advisor/broker/lender- if they're offering a shared equity scheme, then they should have a list of preferred brokers, solicitors and a list of mortgage providers who are willing to back their scheme, else the scheme would fail.

If Halifax have refused, it's possibly for a few reasons:
- budget cuts. With things changing dramatically in the next few months I would not be at all surprised if lenders start panicking again. Do you work in the public sector? They may not be convinced your role is secure and therefore be declining.
- lack of earnings- they may not feel that you earn enough.

Whilst the developer may agree in principle, it's not always a guarantee a mortgage provider will see it the same way.

Do you have any negative marks in your credit history? A criminal record? Are you a FTB? Is this a sole mortgage, or are you buying with someone else?

There is very strict criteria for getting a mortgage at the moment, especially on shared equity. You basically have to have an excellent credit history... no black marks, missed payments, no excessive overdraft use. You cannot have any past, or pending criminal convictions... you normally have to be a FTB, with no intention of BTL. You need to have substantial earnings, meaning that you have enough left over each month that you would not be broke...

The lender will want to be sure that you are entirely reliable and financially viable.

GMS

ztan wrote: »

PLEASE ignore the grouchoes on here who slate shared equity... they're wrong and they're confusing it with shared ownership.

Please check out my thread in Mortgage Free Wannabe, which will tell you all about my Shared Equity Experience.

It is not being confused with shared ownership. Ironically if it was shared ownership there would be less issues.

Halifax have seemingly changed policy since your own experience. Lenders change criteria all of the time, often with no notice.

ztan

I would disagree with shared ownership being less complicated... but then it does depend on the circumstances.

Things may have changed since my mortgage was approved, 2 months ago, true... but that is not really assisting the OP.

Hopefully the OP will be able to answer a few questions and maybe we can find out if there's another reason they are refusing to offer.

GMS

ztan wrote: »

I would disagree with shared ownership being less complicated... but then it does depend on the circumstances.

Things may have changed since my mortgage was approved, 2 months ago, true... but that is not really assisting the OP.

Hopefully the OP will be able to answer a few questions and maybe we can find out if there's another reason they are refusing to offer.

What doesn't assist OP is a post like yours saying everybody else is wrong because you managed to get one.

Policies change daily. Lending is tight.

Shared Ownership is an established product with well known processes. As a result it is understood and dealt with by appropriate lenders. New schemes invented by developers to shift stock are not as simple. Lenders can pick and choose what they do. New builds are restricted as straightforward sales never mind when added incentives are there.

The issue on schemes like this is often that the lender cannot repossess without the permission of the developer, which leaves a lender without a leg to stand on despite having advanced funds. Nobody will lend on that basis.

May be a different issue on this particular case but whatever it is, these schemes are doomed to failure.