Mortgage Lenders - Section 106 Restriction

spowell

I have been offered a property on a low cost housing scheme but am in need of some mortgage advice. I know not many lenders will lend with that restriction in place and to make things worse I have 2 defaults from Jul 01. (both satisfied though) Also have never missed a payment on any credit agreement since

The property is worth £175,000 and I need a mortgage for £135,991 (purchase price). I have got to put down 5% on exchange of contracts and would ideally like to get this back with the mortgage.

Anyone got any ideas of lenders if any?

A_Nice_Englishman

Is this a scheme where you buy part of the house and rent the rest from a housing association? If so, the housing association should be able to advise.

spowell

The house is being sold by Wainhomes who have to sell off some houses below asking price to be granted the planning permission. The local council set a price and also nominate who should buy it from the waiting list. No rent needs to be paid to anyone but on resale I can only sell for 76% of it's value

A_Nice_Englishman

Sounds like it might be the HomeBuy scheme then?

spowell

No there are no loans involved. The 135,991 is all I pay

A_Nice_Englishman

Must be some sort of local arrangement between your council and the developers then.

I'm afraid I can't really suggest any lenders. A whole-of-market mortgage broker would probably be the person to see. There are some on here i think who may be along later to offer advice

Ian_W

spowell wrote:

The house is being sold by Wainhomes who have to sell off some houses below asking price to be granted the planning permission. The local council set a price and also nominate who should buy it from the waiting list. No rent needs to be paid to anyone but on resale I can only sell for 76% of it's value

I'm no expert, hopefully one will be along shortly, but from this post the market value ISN'T £175K for the property you're buying because you [and I assume your lender would also be bound by this restriction, if you were to default] can only sell the property for 76% of it's market value.

So you're really after a 100% mortgage - I'm sure it is possible but it is likely to be more expensive even without your previous defaults, though they're satisfied and long enough ago that I wouldn't think they're too damaging.

I've heard of schemes like this in areas which are attractive to "outsiders" like retirees or holiday home owners, where the LA require a % of homes to be "affordable" to local people as a condition of PP. Trouble is whilst an identical home may be worth £175K on the open market, whilst the restriction lasts on the one you want to buy it isn't.