Rent To Buy Mortgage Problems

davidhowells

Hi, myself and my parter signed up for a rent to buy scheme in 2011, as we live in Wales there was no Help to Buy Scheme in place so seemed the best way onto the property ladder. This is where half our rent of £800 would go towards our deposit. After 3 years, we would have £14,400 to go towards our deposit, purchase price of £199,000k.

Over the 3 years we paid off our overdraft etc to build up our credit rating and have put together the 5/6k needed to make a 10% deposit. However, its now becoming increasingly apparent that lenders will not accept this contribition from the house builder. We have to complete by 31st March 2014 and risk losing out on all the money we have put into the scheme (the legality of this itself seems a bit dodgy to me, but thats for another day)

We are unable to raise the necessary fund to get to a 5% deposit within this time frame.

Has anybody else gone through such a scheme and/or know of who to go to?

The closest we have come to is Santander who could accept the deposit from the homebuilder as a "gift" but would not be able to lend the 90% as its a apartment

kingstreet

If the purchase price is £199k, 10% deposit is just shy of £20k. Do you have that in total, plus the £3,500 you'll need to cover fees?

The problem you have here is you're trying to get 90% on what many lenders will still class as a newbuild.

Until it gets to two years old and has been sold at least once, many treat it as a newbuild and then the maximium LTV is 85% if it's a flat.

I suggest you speak to a local broker about this. They are more likely to be switched on to what local lenders will offer on such property and in your circumstances.

Traipsing up and down the high street is likely to leave you worn down and with a trail of pointless credit searches behind you.

davidhowells

Kingstreet, thanks for your response. We would have the 20k for the deposit and the money for the fees IF people accepted the 14.4k from the Developer. I.e we have close to 9/10k of our own money.

The problem is they aren't accepting the source of this deposit contribution (even though we don't physically touch the money - it is wired to the solicitors)

We've only had the 1 search on our file, was with Lloyds who my partner works with. We were originally told that they would be able to accept this method of deposit but now have been told that is not the case.

We've spoke to a local broker and the people they have recommended are unable to provide the mortage

The only alternative supplied is a 14.4k reduction off the purchase price but are still in the situation of not being able to raise the necessary capital for a minimum 5% but we wont be able to source the necessary funds in time

kingstreet

... and then you'll hit the issue of it still being classed as a newbuild by many lenders. Chances are the one that will accept the deposit will be one with the newbuild issue.

You seem to be downplaying that, thinking the deposit issue is all you face. It isn't.

Speak to more brokers. I'm not saying there is a solution but you should exhaust all avenues before you give up.

davidhowells

No I'm not downplaying, fully appreciate what you are saying; its also an apartment on the 7th floor above shops so again, narrowed down to who we can go to. We've been in the property 3 years, regardless we've got a broker on the case who fingers crossed will help the situation.

Side question; I've been offered a new job for more money, I'd assume that starting a new role is a big no no whilst looking to source the mortgage?

kingstreet

It depends on the lender, like everything else.

If there's a probationary period, some will not lend, others don't have a problem.