106 agreement/resale covenant mortgages

armandog

Hi Huys,

We have a holding deposit on a lovely affordable home in Cornwall but can't find any lenders willing to lend us a mortgage below ridiculous ltv for first time buyer. Does anyone have any experience of this? It just seems like a scheme for affordable homes actually leads to unaffordable mortgages.....

feeling pretty upset now.

ethank

Is this a new property?

amnblog

Is this a resale covenant deal?

armandog

it is a newbuild and the 106 stipulates that only those with a local link can purchase and i understand this is why banks steer clear? Ironic thing is that housing is in such demand here that would never happen! The house is still 6/7 months from completion and we have over half a 10% deposit but there's no way we could get to 20%. Can anyone help/advise?

kingstreet

TBH your issue is as much about it being newbuild and your lack of deposit, as it is the s106.

Lenders don't like lending more than 80% to 85% on newbuild houses, less on flats. There are only a few lenders who will do 90% and with the S106, they will all drop out.

Is there no HTB - Equity Loan option?

armandog

thanks, we've found quite a few lenders who will do 90ltv on a new build, but the s106 will probably make a klaxxon sound in the call centre! It just doesn't seem like good value anyway. paying 20% and then having to sell at a discount. Totally contradicts the idea of s106 affordable housing. more like unaffordable housing!