Shared ownership new build 95% ltv mortgage

redcell2k

Hi All,

First post so be gentle
Basically I'm after a mortgage for a new build Shared ownership 3 bed house @ 95% ltv for a
50% share of the house.

Affordability wise there are no issues as I'm on a good salary and the amount to be borrowed is x2.6 of Salary.

Main issue is the 5% deposit and some adverse credit history i.e.: pay day loans just over 2 years ago and some missed payments last year.
No defaults or ccjs etc.

What are my options? My broker tried leeds bs but i was declined, luckily it was a soft search.
He advised only way was with 10% deposit. (Which i dont have) , will any other lenders consider me?

Thanks it advance.

haras_nosirrah

Hi. I specialise in shared ownership and have done for 10 years.

There is a lender who I feel would support your application. I have just got someone a 100% mortgage with 4 defaults over 3 yrs old.

Rates aren't market leading - looking at around 4.5% for a 5 % deposit with this lender. Another lender at a lower rate may also be an option but would be a case of checking the credit file.

But subject to the small print should be doable with a 5% deposit

redcell2k

Hi , thank you, are you able to share who these lenders are?

haras_nosirrah

Without doing a fact find we can't as it would be deemed giving advice. I would recommend consulting another broker as if what you have said is correct then I think 5% is possible but would be a case of doing an agreement in principle

redcell2k

Ok i understand, thanks very much for your help and giving me hope again. I'll try another broker.
:j :T

fiisch

If you have a 5% deposit, and if buying 50% gives a fairly low LTV, have you considered help to buy? (20% equity loan from government, interest free for 5 years, 75% mortgage, 5% deposit)?

If this is an option, your monthly outgoings are likely to be cheaper as you're not paying rent as well as a mortgage....

redcell2k

Hi,

As per my original message this is a shared ownership purchase hence i don't believe HTB equity loan can be used with this, please correct me if I'm wrong!

AnotherJoe

Is this a wise purchase at this time* ? You are doing little more than renting it with the downside of potential house price falls.


* thats my subtle way of saying i think this is a poor idea. Wont take much to get into negative equity

redcell2k

Hi AnotherJoe, thanks for the feedback, i understand and appreciate the risks and benefits of such a purchase .

D_M_E

Shared ownership has one big disadvantage - the fact that you will be paying rent on the bit of the property which you do not own.

Have you factored in this additional monthly cost - or added it to your expected monthly mortgage costs, and if so, does it still look affordable or would you be struggling?

Investigate the help to buy option as this would mean no rent to pay as well as mortgage - you may find another, more suitable property which offers this option.

redcell2k

Hi DME,
Yes i have factored in the rental costs & service charges, I'm well aware of what they are and how they can increase.
It is still affordable and i will still be able to save for a rainy day / overpay on the mortgage (amount depending on if/what rate i can get) and be able to staircase up.
As per my original message the affordability side of things seems fine based on the numbers.