Shared Equity Mortgage problem

candchagg

Can anyone help. I have placed a deposit on a Persimmons New Build through there 80/20 Shared Equity Scheme. They referred me to their Mortgage Advisor who obtained a Mortgage for me for £98250 through the Halifax (who I bank with). My problem is that my solicitor is now saying that the mortgage is not suitable as Halifax are saying that No interest should be paid on the Shared Equity Loan (that the builder provides) after the first 5 years where the loan is interest free. My solicitor has informed me that there is a 3% interest charge on the shared Equity Loan after the 0%/5 years has elapsed. I cant understand why a Broker who I was referred to by Persimmons would recommend a mortgage that was not suitable to purchase the property. Any advice would be greatly appreciated.

kingstreet

AFAIK most (if not all) builder SE schemes see interest payable on the second charge from the end of year five onwards. Halifax criteria is a little unclear on this. In the standard SE criteria, there's no mention of the interest on the second charge. In the section on HomeBuy SE, it reads;-

Shared equity (HomeBuy) in England

This scheme is part of a Government initiative to help certain groups of people including key workers (such as nurses, police officers and teachers) and social tenants to afford their own homes. It enables people to buy selected new build properties with the help of an equity loan.

The scheme is available through the Homes and Communities Agency who together with the house builder will provide an equity loan of up to 30% of the value of the property. The buyer will secure the remaining equity share. The equity loan will be secured by way of a second charge with an interest charge/fee payable after the first five years.

I suggest talking to your broker about this. It may be the Halifax has treated the purchase differently to what it actually is.

r83_2

Are you buying in Church Park, Basildon? My wife and I just finished buying the house here and could help with your question. PM me for further info.

Ta,
R

candchagg wrote: »

Can anyone help. I have placed a deposit on a Persimmons New Build through there 80/20 Shared Equity Scheme. They referred me to their Mortgage Advisor who obtained a Mortgage for me for £98250 through the Halifax (who I bank with). My problem is that my solicitor is now saying that the mortgage is not suitable as Halifax are saying that No interest should be paid on the Shared Equity Loan (that the builder provides) after the first 5 years where the loan is interest free. My solicitor has informed me that there is a 3% interest charge on the shared Equity Loan after the 0%/5 years has elapsed. I cant understand why a Broker who I was referred to by Persimmons would recommend a mortgage that was not suitable to purchase the property. Any advice would be greatly appreciated.

candchagg

No the house is in Ashington, Northumberland. However where it is built shouldnt matter. I am still interested in your advice/experience.

r83_2

Hi,

We went through a mortgage broker and conveyance solicitor, both as recommended by Persimmons in Basildon.

We went for 80-20 Shared equity scheme, paid 5% deposit and got 20% from Persimmons on 5 year interest free (and 3% from year 6-10). Neither Halifax nor the conveyancer had any questions asked about Shared equity in particular. Saying that, when we reserved the property, sales advisor had forgot to mention 80-20% Shared Equity thingy on reservation form and had to re-do the whole paper work for Mortgage purpose. I don't know if that is the case with you as well.

Are you going through a broker?

Regards,
R

candchagg wrote: »

No the house is in Ashington, Northumberland. However where it is built shouldnt matter. I am still interested in your advice/experience.

candchagg

I am going through a broker who arranged the mortgage, however he is saying that there is some clause regarding the payment of interest of the Shared Equity loan after year 5. He is telling us that halifax are stipulating that there should be no interest to pay on SE loan after year 5 as part of the terms and conditions of getting loan. I am totally confused as you can see from previous thread ALL schemes charge you interest after Year 5. Thanks for your feedback.

kingstreet

Talk to Persimmon. Ask them if other property on the development has been sold with a Halifax mortgage, and if so, how.

r83_2

Also, if you refer to your mortgage offer (assuming you have a copy of it). If there is such clause, it should have been mentioned therewith. You will see normal clause like B&C Insurance as must etc etc, so don't panic !

kingstreet

I think it's fair to say a broker who works with builders doesn't remain a broker who works with builders if he makes a silly mistake which puts a sale at risk. That's why I think this will be sorted out.

Builders are as hard on brokers as they are on buyers.