Right to buy mortgage

cazlack

I am in the process of doing a right to buy mortgage , and i am lucky enough (hopefully) that the property has been valued at 104000, the discount has allowed my to buy the property for 68,000 and i can take my mortgage up to 88,000 so i have 20k to do home improvements , all sounds good .
I am getting a little worried as i feel its all to good to be true , i have a broker sorting out my mortgage , its through the halifax , but he says the halifax wont release the 20k for home improvements until they are done , we need an invoice from a builder to prove the work has been carried out before the money is released . has any on else ever heard of this ?
Also as i am a first time buyer and never used a broker before , i just wanna check the process is correct , i have given him all my details pay slips etc , and the valuation fee , but i haven't signed anything yet ? is this right ? Thanks

poorlittlefish

If you are borrowing extra money above the RTB purchase price for home improvements then your lender will need to obtain a Deed of Postponement from the Council (assuming they're who you're doing RTB through).

sockpuppet

poorlittlefish wrote: »

If you are borrowing extra money above the RTB purchase price for home improvements then your lender will need to obtain a Deed of Postponement from the Council (assuming they're who you're doing RTB through).

Is that correct? We used to do a lot of RTB mortgages (altho some years ago now!) and often used to do mortgages for the RTB purchase price plus extra. This was not a problem as the total amount would still have to be within the maximum LTV of the lenders criteria. I dont think the council was interested in how much your mortgage is for?? Their only charge on the property would be that it had the 5 year limit for re-selling it.

I cant ever recall the lender wanting the work to be completed before they would release the additional money - Obviously things may well have changed now or it may be dependent on what work needs doing - is it something structural?

sockpuppet

Halifax criteria on Right to Buy states:

"Loans may be accepted up to 100% of the discounted purchase price, provided that they do not exceed Halifax lending limits based on valuation.
Home improvements allowed - for funds to be released we require sight of invoices, alternatively a retention will be made at completion; funds will then be released on production of invoices"

You need to clarify what they mean by 'invoices' - do they mean 1. costings for the work to be carried out
or do they mean that
2. the work has had to have been already done and paid for and you have invoices for what has been paid for this work

I would think it more likely to be 1, as if it is a RTB purchase you are not yet the owner of the property and not yet likely to carry out substantial home improvements until you have completed your purchase. But get your broker to clarify.

As for your other question, no you dont need to have signed anything from your broker but you should have recieved a Key Facts Illustration detailing the product/costs/payments etc and a document stating what (if any) fees he charges and when these are payable.
If he charges a fee, he may well have a form for you to sign stating this/that you agree