Mortgage Offer

BadgerFace_2

Eric1 wrote: »

Hmm, 95% LTV, I thought they didn't really exist anymore.
Unless that "local new deal scheme" gives some incentive to lenders, the OP's chances are not looking great.

The loan to value is actually 57% for mortgage purposes. Many people on here do not understand these schemes (this is not intended at you), but feel quite happy in advising people not to do them, or telling them how bad they are!

When in actual fact OP will qualify for a MUCH better rate than if they had saved up 20% deposit. Don't get me wrong, there are loads of pitfalls with them, same as anything.

MrsJT_2

The mortgage will be going through Halofax the advisor has confirmed this. He has already had credit searches and they are fine, so fingers crossed all will be ok when halifax look at his details.

Eric1

BadgerFace wrote: »

Therefore in this scenario, the bank would have more than adequate security. It is the person supplying the 40% who is taking the risk.

I had no idea, but if that's the case, I suspect ultimately the person taking the risk is the taxpayer

MrsJT wrote: »

The mortgage will be going through Halofax the advisor has confirmed this. He has already had credit searches and they are fine, so fingers crossed all will be ok when halifax look at his details.

Good luck.
please don't shoot the messenger
No more cheap mortgage deals, warns Halifax

MrsJT_2

Providing all goes through ok which seeing th emortgage advisor last night he seems to think will, we will be a customer of Halifax before the end of December therefore we will be taking a mortgage out before the 4th January :beer:, thanks for the heads up though!!

GMS

BadgerFace wrote: »

You are mistaken with shared ownership, which is what you are describing.

I take it you haven't dealt with this before, as shared equity is where the purchaser will own 100% of the property, for a lesser amount, usually 75%-85%. The builder (or sometimes government scheme) then places a second charge over the property for the remaining money from the sale (note an actual cash value, not %). The mortgage company has the primary charge over 100% of the property and classes the value the builder has put in as cash deposit with regards to mortgage rates.

Therefore in this scenario, the bank would have more than adequate security. It is the person supplying the 40% who is taking the risk.

Shared equity schemes differ and are difficult to place.

The shared equity holder needs some form of security which can and often does lead to covenants so restrictive that the first charge holder will not complete on them. There have been clauses where the mortgage company could not repossess without the permission of the shared equity holder, which stopped completion.

A 40% builder deposit would not be allowed by the vast majority of lenders so this adds more problems to the deal.

Halifax were doing some of these deals but have been more and more restrictive.

I hope the OP gets the deal completed. When builders offer these schemes they should stick to the same terms and have a panel of lenders to do them in my opinion.