What's our chances?

Rach_b_123

Hi,

My husband is going to be applying for a mortgage tomorrow via a mortgage broker on a shared equity property. First time doing this for us. If approved, the monthly re-payments will be less than the amount we are currently pay on our month rent, so really hoping this goes through...finally get a foot on the ladder.

His credit file has no CCJ's, no defaults, no credit cards, no loans apart from 1 car hire purchase agreement. He has worked for his employer for 11 years and has lived at his current address for 3.5 years. He is on the electorial roll. His income is currently £31,000 and we want to borrow £76,000 (buying an 80% share in the property). We have a 5% deposit.

Experian shows his car hire purchase agreement as a 'negative factor' as it's a high amount. Its for £21,000 but at the end of September/early October this is due to be updated to approx £10,000 as he recently downgraded his car and cut his HP loan in half and his subsequent monthly re-payments on this loan in half too. He was paying £300 per month on this but is now paying £150 per month.

Is it worth waiting a bit longer to get the lower car HP showing on his credit file or just allow the mortgage broker tomorrow to apply for a DIP and if he gets rejected then try again once the lower HP is showing?

Time is of the essence as our landlord has sold our house and we'd need to be out of here in two/three months...be nice to not have to rent a house again for a short-term 6 month let if we can avoid it by buying a house instead.

Thanks everyone - so nerve wracking this!!

ACG

Why are you not going on the mortgage?

Rach_b_123

I currently have no income (long story....recovering from a serious emergency op and unsure of when I will be fully fit for work or when I am fit for work, how many hours I will be able to work at that time). I also have 1 unsettled default that I am currently paying off via re-payment plan.

Our credit files are not associated with each other on all 3 credit reference agencies.

ACG

I dont really do shared equity mortgages, there is a broker on here who does though so i think i will avoid answering and leave it to him.

From an affordability perspective, it seems like it should fit. If they question the £300-150 payments you can always provide paperwork to evidence that the previous car has gone back and the new one is to replace it so i wouldnt worry about that too much.

Rach_b_123

ACG wrote: »

I dont really do shared equity mortgages, there is a broker on here who does though so i think i will avoid answering and leave it to him.

From an affordability perspective, it seems like it should fit. If they question the £300-150 payments you can always provide paperwork to evidence that the previous car has gone back and the new one is to replace it so i wouldnt worry about that too much.

Thank you. I've done a quick affordability calculator on the Nationwide website and included the new £150 car payments and his monthly student loan payments and it says they may be prepared to lend up to £110,300 and we obviously want to borrow much less than that so fingers crossed. Just used nationwide as an example. It's this part that worries me though, "This is subject to a satisfactory credit score..." - although his credit file has nothing adverse on his, it has in Experian's words "one negative factor" - so hoping its not just a case of "computer says no" when they see this negative factor and that it goes to an underwriter so we get the chance to show them the paperwork for the new car agreement.

Maybe it goes to an underwriter anyway as a standard/essential part of the process (bit clueless on this as first time applying).

Can anyone with shared ownership mortgage knowledge help? Thank you.

kingstreet

Is it shared equity or shared ownership?

You've used both terms in the thread and they are very different animals.

Rach_b_123

kingstreet wrote: »

Is it shared equity or shared ownership?

You've used both terms in the thread and they are very different animals.

Hi - apologies - did wonder if there was a difference.

The property is offered for sale at 80% shared ownership.

kingstreet

That's unusual. Shared ownership normally tops out at 75%.

On shared ownership, you buy a share and you rent the remainder, normally from a Housing Association. The property must be leasehold with the HA retaining the freehold and insuring the building, charging a service charge to reflect this.

Shared equity means you own the whole property but a third party, the Government or a builder increases your deposit so you may only have a 75% mortgage. This "equity loan" is repaid at the end of the term or when you sell, but is repaid as a percentage of the value of the property then, rather than what you got at the outset. The equity loan is a second charge over the property and can be interest-free for the first few years.

Rach_b_123

Yes I found that odd too as when googling "shared ownership" it states "upto 75% ownership" on everything I have read.

I wonder if the previous owner bought extra shares in the property totaling 80% and they want to now sell their 80% share....

I will stop worrying about the car-issue now anyway and we will just go ahead tomorrow and see what happens. Fingers crossed! Cannot think of anything else we can do...we've made sure his credit files are as perfect as they can be on experian, equifax and call credit and that we are disassociated.

Thanks for helping ACG and kingstreet.

kingstreet

So, this is a shared ownership resale?

Have you been through the HCA HomeBuy Agent/Housing Association vetting process and been approved?

75% is the usual maximum because c80% has stamp duty implications;-

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm

Rach_b_123

kingstreet wrote: »

So, this is a shared ownership resale?

Have you been through the HCA HomeBuy Agent/Housing Association vetting process and been approved?

We are first time buyers buying a house that has been previously lived in by the current owners.

Tomorrow is when we start the process of getting approved. We are using a financial advisor who specialises in mortgages for shared ownership properties. I have no idea if she is a HomeBuy Agent, I thought I would go with her as a starting point as she works for the Estate Agent and the lady I spoke to said only certain lenders offer shared ownership mortgages and she has access to these lenders. The vetting process hasn't really been explained to us at all yet...we have to start by completing a form that gives her consent to apply for an 'agreement in principle'. We are faxing this form to her tomorrow.

Thanks for the heads up on stamp duty.