Shared Ownership mortgage options

Kent_FTB

Hi all,

In my previous posts I have made reference to the fact that I am currently look to purchase a shared ownership property.

The property value is £135,000 and our share would be 35%, so £47,250. We have access to £5k minimum and can probably up this to around £8-£9k if required.

Initially I made the application solely in my name (with my partner and child living with me) as my income is higher, and my partner was not registered on the electoral roll at her current address at the time. However, I have a default on my credit file (Equifax shows satisfied in 2008, Experian shows satisfied in 2010 - and the lender I was looking to use won't accept a default satisfied in the past 36 months, and they use Experian to credit check.. so I was declined).

However having checked my partner's credit file, she is now appearing on the electoral roll at her current property which I believed was the main reason we couldn't submit a joint application previously. She has no defaults or late payments on any accounts.

Does anyone with any knowledge of shared ownership mortgages feel that we may have more success if we make a sole application in her name? With our deposit, we would require a mortgage of between £38-£42k. Her base income is around £12k a year but this can increase to around £14k with overtime (not guaranteed).

I will discuss this with our broker in the near future, however I just wanted to gather some thoughts on here first. If possible, we would obtain the mortgage solely in her name and then once my credit rating is looking better, we would add me to the mortgage.

I would, of course, be helping with the mortgage/rental payments each month despite not being named on the mortgage, if that makes a difference to lenders?

Thank you for any advice.

Kent_FTB

Upped in case anyone can help.

Dave_Ham

Your broker should be doing the thinking for you here, although this looks sensible approaching it in the new way..

Good luck

Kent_FTB

Thank you Dave - initial conversation with broker led to him feeling she may only get a loan of around £30k, which wouldn't be quite enough for us unfortunately - however he hasn't run any official checks on her just yet to establish the definite value she could obtain.

Would a lender take into account the household income which would be used to service the mortgage, even if it includes income from someone named not on the mortgage? Would they see that I bring in around £2000 per month into the household which would be used to help pay the mortgage? Or not - as I predict..

Dave_Ham

Most definitely not.

Does she have any loans or credit cards that would come out of affordability and given the type of shared ownership scheme you are looking at; does this have any lender restrictions.

Given the information above, I would think this could be achieveable.

kingstreet

You need to ask the HA if this will be possible. Without your income, the affordability may not stand up, regardless of the mortgage situation. EG - The rent is 2.75% of the value of the share you aren't buying - £201 per month.

Your income won't be taken into account if you aren't party to the purchase/mortgage.

Presumably you were going to Leeds, as the only BS offering 5% deposit on SO?

Kent_FTB

She has no loans or credit cards at all; she's always been very sensible with her money and I don't think she's even touched her overdraft, ever.

Of course, we have our son's nursery fees, which (until he is 3 years old, next March) total £700 a month or so (should be halved in March hopefully). Would it be acceptable for me to cover these costs (I assume so, being his parent) so that these don't come under her affordability?

Kent_FTB

Our share would total £47,250 and we can (at a massive push) manage around £9,000 deposit I think, so we can put down a 20% deposit.

We did have an application with the Leeds but this was rejected, at quite an advanced stage, as they said they were "over-exposed" on the development we were looking to purchase on, and couldn't have any more funds tied up there.

Dave_Ham

This is going to be tricky given that information.

All I can suggest is that you keep in constant contact with your broker and push them for results..

Best of luck...

kingstreet

Okay.

Let's get all this down.

She earns £12k gross pa.

What tax credits does she get?

What is the monthly cost of childcare?

Is the rent £201 per month? Are there other charges, such as ground rent and/or service charge?

kingstreet

If the Housing Association has approved you based on a joint purchase, you need to contact them urgently to see if they will still accept you on a sole purchase.

You may mess about getting the mortgage, only to find you are no longer able to purchase.