Help Halifax reduced offer from 90LTV to 85% LTV 3 month later!

kingstreet

There is an automatic creditscore downgrade by one level when you apply for a property on shared equity or shared ownership. Edited to remove reference to shared ownership.

A mortgage promise with an A pass will become a B pass at full app, or a B pass will become a C.

That may be enough to see the max LTV reduced.

2cat

Should our mortgage advisor known about this credit score down grade at the start of the mortgage AIP? If we had known this at the start, we wouldn't of carried on with the valuation and solicitors costs etc. Will we be entitled to any refund?

opinions4u

kingstreet wrote: »

There is an automatic creditscore downgrade by one level when you apply for a property on shared equity or shared ownership.

It's a few years since I "meddled" with a shared ownership mortgage on the branch sales platform, but I have certainly seen them come out at "A" following full application and go through to offer on that basis.

There was a very common keying error made by mortgage advisers though - failing to clarify the share being purchased. This would typcally leave a 90% loan look like a 45% loan. When the error was corrected an A or B would usually drop to C or D. Posts on here over the last 12 months suggest that this still happens.

As I say, my knowledge on this one is a few years behind the curve. But I know they still use the same system.

2cat

As far as we know the mortgage advisor did the application knowing the property was discounted for sale 75% we own and 25% council owned and Halifax knew this at the start.

kingstreet

o4u - I was working with a social housing specialist last year and he told me about this. He explained that the Intermediaries Online system didn't give any option to tag a shared equity Mortgage Promise application as such. That's why it was possible to confuse the system into thinking the deposit was actually larger than it would be, because the equity loan distorted the figures. I should not have mentioned shared ownership. We were dealing exclusively with shared equity cases. Apologies.

Now the IO system is fully online for all but Product Transfers, I'm not sure if the problem still exists. Next time I speak to him, I'll ask. For the other advisers - next time you key a Promise, see what comes up about Shared Equity.

If I'm out of date, I'll happily be corrected.

2cat - Are you sure about the basis of ownership? Shared equity or shared ownership? Will you pay rent on the portion you aren't buying or is there a separate loan which is interest-free for the first few years?

Thrugelmir

2cat wrote: »

we wouldn't of carried on with the valuation and solicitors costs etc. Will we be entitled to any refund?

How have you incurred valuation fees if you haven't applied for a mortgage?

Likewise solicitors fees. As work normally does not commence until an offer is in place.

2cat

Hi kingstreet

The property will be sold on a "Discounted Sale" (Resale Price Covenant Scheme) basis. Prospective purchasers will only pay 75% of the open market value. There is no additional rent to pay on the discounted 25%; however, this discount will always be applied on each future resale. Applicant conditions and scheme criteria apply.

The buyer obtains a mortgage for the discounted price and does not pay rent on the remainder. If you buy a discount sale home you cannot purchase any shares in the property as it is a 'fixed equity' home.

When you sell your home you will have to sell it at the same discount percentage at which you bought it. When you want to sell you must notify the housing association that manages your home.

Your home must be sold to someone who is unable to afford a home on the open market.

We were hopefully buying it from the first previous owners

Hopefully this will make it clearer? It took me a while to understand this scheme.

SouthCoast

Prospective purchasers will only pay 75% of the open market value.

Who decides what the open market value is?

2cat

The estate agents must of valued the house and then we paid for the valuation (independent valuer) which Halifax requested.

kingstreet

Ok. It's a type of shared ownership with no rent payable on the council share. A mortgage protection clause has been written-in to allow Halifax to sell the whole property on repossession.

The AIP gave 90% but the full application reduced to 85%?

When did the address problem come to light? If it was at the AIP stage, it would have down-scored you at the outset.

I guess there's always the potential that Halifax has changed its qualifying score between the AIP and the full app? We know Halifax Promises are rapidly taking on the quality of chip-wrapping.