Shared Equity Mortgage

jameseadon

Hi Guys,

I am currently on the governments HomeBuy Direct 70/30 shared equity scheme.

My product is due up and I went to Halifax to fix my rate.

When I took the product out, I was given an LTV rate of 60%-75% as they are only mortgaging 70%. Now however I am being offered a 85%-120% rate because I am mortgaging 96% of the the 70% - I don't think that's right, any help out there?

Thanks,

James
(1st time poster, so go easy)

brit1234

When do you need to pay the equity loan back?

It seems right. You have nearly no equity and fall above the 95% LTV. The equity loan can't count as equity because it is another 30% debt on the mortgage.

How did you get the original mortgage? Was it through the builders own broker?

You are not alone, there are many people in the same position as you. Next year you will here a lot more people having problems with this scheme as the shared equity time bomb (equity loans start to have to be repayed) hits.

jameseadon

Equity loan starts being repaid in October 2015 (I Think - could be 16), I used builders broker, won't do that again!

I understand what I own, however I can't understand why the bank can with hold the rate, there is not greater risk to whether the builder, the government or myself owns the remaining 30%

Also, all the definitions online seem to back up my theory.

How can they give me 70% back then and 90% now?

jameseadon

Read this for me and see if you agree?

ht tp://ww w.sharetobuy.com/gettingstarted/shared-equity

brit1234

I understand what you mean by reading that text

Under the homebuy direct form of shared equity you were able to buy a new build property with an equity loan, typically for 30%, provided half and half by the Government and a builder. With FirstBuy, the arrangement is similar but the maximum equity loan is 20%. However, taken together with the customer's own deposit of just 5%, this still gives total equity of 25% and means that the buyer can access potentially attractive 75% loan to value mortgages despite putting down a small deposit

http://www.sharetobuy.com/gettingstarted/shared-equity#casestudylist

I can slightly understand that point as the loses are shared between you, the builder and the government. However I am also aware how lenders can change their relations to such schemes. For example the Newbuy scheme where the lender and government shared the risk of the property to get a lower LTV however all the lenders saw it as a higher risk and upped the agreed rates.

Mortgage lenders are getting tighter on their lending at the moment and want to improve their mortgage book health. So they are offering uncooperative rates and conditions to higher risk users. It could be that they simply don't want your mortgage as its terms have ended to get you to go else where.

Probably best you speak to a good independent mortgage broker.