Mortgages & shared equity

randomnut

Hi,
Around 6 months ago, my partner and I bought our first house. Because we only had 5% deposit, we took the housebuilders scheme where we got 15% of the value as an interest free loan for 10 years, which we are to pay back at that point or if we sell before. This meant it should open up cheaper options because we only had to find an 80% mortgage.

When we spoke to the mortgage advisor from New Homes Mortgage Helpline, he told us that there are very few lenders who will participate in this kind of thing and we were left with Nationwide and Halifax. We took what at the time seemed a good deal at 5.6% with Nationwide but upon reflection, it seems odd that only 2 lenders 'would participate in the scheme'.

Surely the 15% loan is a private dealing between us and the housebuilder and nothing to do with the mortgage?

Just to satisfy my curiosity, does this sound right that because of this fewer people would lend do us? Or is it likely he pulled one over on us to go with their preferred lenders?

Many thanks!

Thrugelmir

randomnut wrote: »

it seems odd that only 2 lenders 'would participate in the scheme'.

Surely the 15% loan is a private dealing between us and the housebuilder and nothing to do with the mortgage?

Hi,

The 6 main lenders in the UK account currently for around 90% of all new lending, so 2 particpating is around 33%.

The risk is in the lack of equity in the property should you default. This has a material bearing on the terms of the mortgage , in your case the rate of interest being charged.

dimbo61

You dont give your interest rate or length of the mortgage deal ( not term 25 years? ) but one thing you can do is overpay as much as possible ( Nationwide allows £500 a month ) I think!
Build up the equity in your home.