Mortgage brokers - have you dealt with section 106s?

JW96

Hi there,
Questions are - how difficult is it to get a mortgage? 
Do Kensington and aldermore lend for 106s?
Are you able to recommend brokers for adverse credit on here? 
House is 180k (60% market value) and our combined income is 50kish
My credit is clear, partner has default around £1400 2 years ago and 1 yr ago mobile around £60ish. Both satisfied.
Apologies for the post, beginning to wonder if the stress is worth it due to the combination of adverse credit and 106. Because the property is so cheap (for our area) we are willing and can afford to go up to even 6% interest rates as long as we know it will go down in a couple of years as the defaults age.
Thanks

Whats_your_forte

Section 106? I was under the impression this is a builder/developers issue and their requirement for CiL contributions ie should have been resolved elsewhere. I'm assuming you are buying or are you the developer/applicant? 

davidmcn

Whats_your_forte said:

Section 106? I was under the impression this is a builder/developers issue and their requirement for CiL contributions ie should have been resolved elsewhere. I'm assuming you are buying or are you the developer/applicant? 

s.106 covers all sorts of planning agreements, which can be initial developer contributions but also perpetual obligations about e.g. occupancy or ownership of the properties being restricted to local residents/keyworkers, properties being kept at an affordable percentage of market value, etc.

The answer depends on what the conditions actually are, so the OP will need to tell us.

ACG

S106s can be years old I think. We do not come across too many of them in Manchester but I have seen them in Devon and Northumberland way. 

Many lenders can accept S106s, but a lot comes down to the details, some will accept certain types and not others. It needs to be checked with the lender prior to applying really as them accepting S106s does not necessarily mean they will accept your specific one. 

Whats_your_forte

So less about the initial s106 and more about a S106 restriction. As you say, OP didn't provide too much detail.
Aldermore will look at it subject to valuation. There are also some Building societies that would be happy to look at but we need more info (or indeed you broker will) about the restriction.

JW96

Thank you for your replies
Apologies. A bit more detail - 
The full market price for the property is 300k (3 bed semi new build). The 106 in place means it has to be put on the market for 60% of market value for this sale and subsequent sales. For the first 3 months it has to be offered for sale only to those living in the village it is in and after those 3 months it can be put on the open market for anyone to purchase at the 60% price. It's part of a rural affordability scheme.
Our deposit is 27k

Whats_your_forte

Thanks for this. Again subject to valuers comments, then all possible. Doubt you'll get a definitive yes on the forums as both the property and clause would need to be referred but a decent independent broker should be able to help

ACG

I agree you wont get a definitive yes or no on here. You need to check with the lender upfront. 

Some lenders may take issue with the 3 month period where it has to be offered to locals, I think the buying below market value part will be fine in the main. You either need to be calling the lenders or let your broker do it if you have one, only the lender can give you the answer you need. 

[Deleted User]

Most of the s106 restrictions will have some form of mortgage protection clause in them that says that if the lender has to repossess then they dont have to stick to the restrictions.  Its this clause that gives them the confidence to lend.   

There are loads of different types of restrictions though so its impossible to say what will and wont get accepted without running it past each lender.  

I get loads of these around me that are restricted to local people only  We had an issue a few years back where the mortgage clause had some weird wording and when tested was found to not work.  Lenders stopped lending on them until the council (our council has a for profit property development arm) sorted the restriction out.  Trapped people in their homes for about 18 months as no one could buy them 

kingstreet

This sounds like a  fixed equity/discounted open market value case with a local occupancy restriction. If it is, I can think of three lenders who will accept it, subject to the LTV (typical 85%/90% newbuild limits apply) and none are adverse credit accepters. A decent newbuild experienced broker needs to work on this.

JW96

Any idea if Kensington would be likely to accept?