First Buy/ Joint Mortgage

I_Love_Shoes

Hi,
My boyfriend and I are looking at buying a flat or house together. We saw a house we liked for £140k but I have been turned down for a mortgage as I am only 20 and have a few late payments in my credit history =(
The broker we have been talking to suggested we take out a mortgage in my boyfriends name, which would mean we could only get a property worth £125k
We are looking at going through first buy, so our 75% (with gov paying 20% and a 5% deposit) would be £93746. Are we limited to certain banks/ building societies if we are doing this through the first buy scheme?
I am also worried about the implications of having the mortgage in just my boyfriends name, we would obviously both be paying the mortgage. Im not sure about what would happen if we broke up, and who would get what of the house.
Any help would be appreciated.
Thanks

kingstreet

Yes. Certain lenders like Abbey/Santander will not lend on shared equity purchases. You'll probably find you end up with Halifax or Leeds Building Society. Nationwide will also lend, but their valuation policy on newbuilds makes them less attractive to builders advisers.

As the property and the mortgage will be in his name alone, you are in a difficult position should you split up. Get independent legal advice.

AskMeAnother

Firstly, Yes there are a limited number of lenders that will deal with the FirstBuy Scheme. Is the broker you have already spoken to affiliated with the Builder in quesiton, or just someone local to you?

If he is affiliated to the builder he will likely know the lenders involved in the scheme and the likelihood of getting a mortgage with one of those providers.

With regard to having the mortgage in your boyfriend's name only - this is actually pretty common in these circumstances and is mostly going to be based on trust. You should be able to add yourself onto the mortgage when it;s next up for review as long as you have kept your credit file tidy until then.

You could also take legal advise about having some document in place that protects your 2.5% (if you are splitting the 5% deposit). But again many lenders may not be happy with something like this being official.

I_Love_Shoes

Hopefully things won't get messy and we won't break up, and if we do it would be nice to say it will be clean, but you never know! So I would prefer some legal backing so Im not paying half the mortgage for however many years and get nothing!
We have looked at halifax through the broker, the they are at 4.89% which seems quite high to me.
We are looking at getting the flat through Barratt homes, and they recommended the broker to us, she came to see us and recommended a different housing company so I guess she doesn't have to put all her business back to Barratt or to a certain bank, Im not too sure.

AskMeAnother

Barrats probably won't be too happy with her, but that her business of course.

There are plenty of lenders who will deal with the Firstbuy Scheme - but be aware that a lot of builders are offering their own shared equity schemes that are not government backed. With these you would be limited to Halifax and Nationwide.

As mentioned already Nationwide have an awkward valuation policy with New Build properties - some areas they are fine, some are not and you can only take local advice on that matter.

I_Love_Shoes

Does anybody know when First Buy is due to end?
We dont have a £6k deposit yet but are getting worried that the first buy scheme will end soon and we will have to save up a huge deposit which wont happen for years!
the broker suggests we get a loan out for the deposit and tell the bank we are looking to buy a car or something.

AskMeAnother

Well, the first thing to be aware of is that Halifax are actually ok with you getting a loan for the deposit - so you would not have to lie about it.

Nationwide are no longer happy with this and if they ask for proof of deposit they will see where it came from.

Your solicitor will also ask to see proof of deposit are part of the routine money laundering checks, so if you choose to go down this route make sure you're with a lender who allows it.

With regard to the FirstBuy Scheme, there is no set end date - when the current phase nears the end I suspect the Housing and Communities Agency will announce if/when a new product is coming along or if there will be new funding for FirstBuy.

It's likely that builders will always now offer some sort of incentive that means you only need a 5% deposit, so all is not lost if you take your time and save the money yourself.

I_Love_Shoes

so for example if we get the loan through lloyds and tell them its for a house, halifax and lloyds will be ok with that?
Im just worried about the scheme ending soon before we have our deposit =(

AskMeAnother

well, Lloyds would not be happy with it.....

I_Love_Shoes

so wil we have to lie to lloyds and tell halifax we got a loan for the deposit?
My credit history isn't the best, the past 18 months are near perfect though, do you know anywhere that would give me a loan?

AskMeAnother

I'm afraid personal loans is not my expertise.

I don't think anyone will do it if you tell them why though.