Trouble finding mortgage, advice on options?

C22DTJ

Thanks, Dave.

The terms on the builders loan is that Barratts will loan 10% of the value (16500) on which we pay interest only beginning 6 months after the start date at 3.5% for up to 10 years.

After 10 years (or any time prior) we must pay back that 10%, however the 10% is based on the value of the property at the time of repayment and not the original loan amount. Effectively making it a shared ownership I suppose.

Halifax are the lender who've agreed to lend on the 90/10 at 4.5% fixed for 2 years, although this info was obtained through Barratts recommended FTB broker (New Homes).

littlesparkles

Does the builder have a broker you can speak to? We did this initially which helped us to identify potential lenders. We ended up going directly to Nationwide to secure a better deal that the broker did not have access to. However I've just re-read your post and noticed that our property is a lower price and our joint income is higher so it might not be that the lenders are refusing 85% on a new build but about affordability?

littlesparkles

Ah our posts crossed and I can see you have spoken to their broker...

harvey115

I am also buying from Cala (developers), they asked me to speak to their selected IFA to make sure I can get a mortgage and if I would like to use them.

The IFA spoke to me and I told him about my arrangements, he confirmed that he can get me the same mortgage I have arranged through my broker. So I said I am fine with my broker and that was it.

It is usually considered that the Mortgage advisers provided/recommended by the developers are not experienced enough and there may also be issues with their professionalism by such advisers.

Dave_Ham

I tend not to get mega involved in new builds, not really sure why but only do a handful a year.

That offer does not look too bad to be honest on the shared ownership part.

Halifax are what they are, and that rate is fair.

All the best

C22DTJ

Yeah, that deal is actually the most affordable from a monthly perspective. Since we're not intending to stay in the property for more than around 5 years anyway, it may not be a huge issue.

It does seem like I should sort out a broker. I suppose I'm just concerned that if all the lenders are saying we're falling £20-30K short on their lending criteria, then a broker won't be able to help much.

I've just found Barclays 'Family Affordability' scheme too where they allow a parents income to be considered as a joint applicant but they do not need to be named on the deeds as an owner. It's brand new (the lady I just spoke to didn't even know much about it) but it looks like it could be the little help we need to push our borrowing power up to the amount we need.

EDIT: Seems that scheme is for the young ones. Barclays will only lend on the family scheme until the oldest applicant is 70, which gives us 13 years. Also based on our 85% LTV their rate is 6.1%, putting our repayments on 140K at over £1300!

I think the only option is to clear the loan and go with the 90/10. I'm just uncomfortable about the legalities.

C22DTJ

Right, another update.

Spoke to a whole-market broker this morning (London and Country, based on the recommendation on MSE) and whilst they were very helpful, they were unable to find a suitable lender, again due to our ongoing loans/car HP. Natwest came the closest with £125k but only for existing customers (which we are not). Next best was Santander at £113k.

At this stage it's just not feasible, we're realistically £25k short and with current property prices in our area, we're not going to find anything suitable for that price.

With that said, we're now looking at shared-ownership. We've been accepted for a new-build property, 3 bed house, same development as the one we made the offer on, for a 52% share at £101k.

Despite the criticisms of SO, the terms initially seem quite reasonable. 100% staircasing is possible at any time subject to solicitors fees (presumably both ours and theirs), and rent reviews are reviewed yearly at roughly 1% + RPI. We are also apparently able to base resale price on our own independent valuation and since my Father is RICS (albeit QS and not valuation), that may work in our favour when it comes time to sell.

The broker is confident we'll have no problem securing lending on that SO property so now it's just a case of us weighing up the pro's/con's. I'll be honest, it's sounds very attractive at the moment so I'm open to suggestion on any glaring problems with going the SO route.

At the moment it really does seem the difference between buying a house and not.

C22DTJ

I've just discovered a portion of this new development we're looking at is designated to 'Social Housing' or 'Affordable Housing' as the builder calls it. I understand this is part of a law requiring new developments to include a certain number of such properties.

I'll be honest, and at the risk of sounding rather snobbish, this has me concerned.

Obviously the shared-ownership property we're looking at is classed as affordable housing, and I'm not so much concerned if all of the properties on the development are in that category, what bothers me is if a number of them are going to be given to the, shall we say, less desirable tenants.

Is there any way to find out whether the properties are going to be SO or just social housing?

I don't mean to sound offensive but it's a legitimate concern surely? If I buy a share in this house which has effectively been valued at £200k, and then in 5 years time we're surrounded by social housing then I'm pretty sure that'll have a somewhat adverse affect on the value.

With this new law, does anybody buy property on new developments any more?

littlesparkles

My new development has SH on it. The planning application (find it through your council's planning section) details which are shared ownership and which are rented.

To be honest I used to be a bit 'snobbish' about this (as you put it) but any house can become buy to let and be rented to just about anyone. Social housing is just the same really.

C22DTJ

Thanks Littlesparkles, that's a great help, I found what I needed on the councils website as you suggested.

It looks like the previous phase of the development went to planning before the new requirements came in since there's no mention of affordable housing on it.

However, the planning application for the coming phase (due for completion in early 2013) does detail the plans;

61 new dwellings - 21 4 bed houses / 40 apartments

7 of those properties are SO, 14 of them are 'social rent'. It does refer to the previous phase as already satisfying affordable housing guidelines so I would assume a large number of them are also social rent. It also suggests of the overall development, 35% of the properties are affordable housing. It seems odd to drop 'luxury' £300k 3 bed houses right next to social rent properties.

Doesn't look like a good outlook, certainly doesn't make a £200k 3 bed house an attractive investment.

In other news, I found a £65k piece of land nearby with planning permission for a detached 2 bed... maybe I should just get my Grand Designs on and be done with it

perhaps not.