s106 mortgages

beckyben89

Has anyone had experiencing getting these?

Is it true that s106 lenders do not accept loans from family towards the deposit?

princeofpounds

Section 106 lending is a bit less easy for banks (the restrictive covenants make them less easy to sell if something goes wrong, so they are considered more risky as security), so there are less lenders who play in the market and the terms offered tend to be a little less competitive. But otherwise I don't think they are too different.

[Deleted User]

Lenders do accept loans from family as deposit. Depending on how the loan is structured and thr legal nature of it. There are even lenders that accept personal loans for the deposit. No idea what the poster above is referencing

The lenders who deal in s106 mortgages are fewer but they are still some of the best lenders on the market.

Whether you get a lender that does both of these things together is the tricker part. I think you will be fine though. I can think of quote a few off the top of my head that do loans for deposit and s106

Just find a broker and thrash it all out.


Edit: santander, barclays, nationwide, Leeds, tsb. These are top lenders offering top rates. They don't offer higher rates just cause its s106

princeofpounds

Edited my answer - JMA is right, some lenders will accept loans from family as deposits (and thanks for not being harsh in your correction)

But it's not as good as a gifted deposit and can restrict your options to some degree and the terms of your mortgage, especially if interest is to be charged (as it will count as outgoings).

Cakeguts

The only problem that I can see with deposits that are loans or gifts is that the house buyer loses out on the practice of saving.



I would think that not being in a position to save a deposit increases the risk of repossession a lot because as there are no benefits to pay a mortgage if a home owner gets into financial difficulties because of illness or loss of a job andif they are not good at saving money they won't have enough in savings to pay the mortgage while they have no income coming in. Not paying the mortgage is likely to lead to the property being repossessed by the bank and the owner losing their home.



The council will not rehouse people who don't pay their mortgages because not paying a mortgage will be assessed as making yourself intentionally homeless. People who buy houses to live in are assumed to have done enough research to know the risks of being repossessed. Buying rather than renting is high risk for anyone who is no good at saving money. That is why it is so important to save for the deposit so that people get used to saving.



I would have thought that if someone has to be lent a deposit to buy a house then they can't really afford to buy.


People make the mistake of thinking that buying is better and cheaper than renting but if there is a problem with saving money buying has a much higher risk of ending in homelessness than renting does. Buying a house is not a cheap form of housing because of the need to save for repairs and job loss or illness.

[Deleted User]

Cakeguts wrote: »

People make the mistake of thinking that buying is better and cheaper than renting but if there is a problem with saving money buying has a much higher risk of ending in homelessness than renting does.

Id be very surprised if this was true. Is there a source for this information? I would have thought that majority of people who buy are much more stable.

The data I can find shows that:
9% of private tenants have experienced rent arrears in last 12 months
25% of social tenants have experienced rent arrears in last 12 months
but only
0.84% of mortgages were in arrears in 2nd quarter of 2009.

There is an element of comparing apples and oranges with these figures but even with a large room of error, I really doubt people who buy a house are more likely to end up homeless. Especially with the affordability checks in place now

Cakeguts

Deleted_User wrote: »

Id be very surprised if this was true. Is there a source for this information? I would have thought that majority of people who buy are much more stable.

The data I can find shows that:
9% of private tenants have experienced rent arrears in last 12 months
25% of social tenants have experienced rent arrears in last 12 months
but only
0.84% of mortgages were in arrears in 2nd quarter of 2009.

There is an element of comparing apples and oranges with these figures but even with a large room of error, I really doubt people who buy a house are more likely to end up homeless. Especially with the affordability checks in place now

It is because if you rent and you lose your source of income you can claim benefits to help with the rent. There are no benefits to pay a mortgage so if you don't have a lot in savings and can't pay the mortgage you could lose the property. Plus it is a lot easier to move from a rented property than it is to sell a property.



There are other considerations as well that your information doesn't include. Someone who has nothing in savings and isn't good at saving doesn't have to pay for repairs if they are renting but someone who owns a house does and if the repairs are not done the house could be even more difficult to sell if it is in bad repair and the source of income to pay the mortgage dries up.



If you are bad at saving you are really better off not to buy a property but to stay in rented because the risks are lower.



I have just looked and there have been 4580 repossessions this year and the problem is that if the house has been badly maintained when it is sold the sale price may not cover the arrears on the loan as well as the original loan so the ex owner could be left with no house but still be in debt to the lender. You don't get any of this if you rent.



I would guess that one of the reasons why lenders don't like gifted deposits or lent deposits is because there is no history of the buyer making any effort to save. I would expect that that makes them higher risk? Its like a 100% mortgage because they buyer hasn't contributed any money toward the purchase?

[Deleted User]

There is not a lender I can think of that won't accept a gifted deposit no questions asked.

Is this all just opinion or are there any sources to say that people who buy are more likely to end up homeless?

The stats I provided showed completely the opposite

kingstreet

If this is a newbuild purchase on a discounted open-market basis (DOMV), you need to be careful with the loan to value.

Many lenders have a maximum LTV of 85% on newbuild houses and they don't relax this on a DOMV purchase.

The number of lenders offering 90% and 95% on such purchases is very small.