Section 106 mortgage help

Helloht

Hi, we have put an offer on a house with is being sold as ‘buy at 80% and sell at 80% under section 106’ this is a freehold and the restrictions are you never own 100%, and no rent is payable on the other 20% owned by the housing association 

I’ve spoken to a couple of brokers and lenders and they are all confused what scheme this is and how it will be considered by lenders. Does anybody know of any lenders or brokers that know much about the scheme (we only have 5% deposit) 

the housing association are saying the scheme doesn’t have a name, but they were built as affordable housing units, the estate agent has no idea 

lenders are asking is it shared ownership, shared equity, right to buy etc but I don’t think it falls under any of these

Thanks!

Snuggles

I live in a property under a very similar arrangement, only difference being ours is leasehold.

When I purchased (2006), it was termed "shared equity", but it isn't really, and that seems to have a different meaning now. Really it's just buying a home with an S106 resale restriction.

If it helps, my mortgage was with Nationwide, and I believe Halifax, Leeds Building Society and possibly Skipton may also lend on these type of properties.

kingstreet

It's known as discounted open market value (DOMV) and it is used in areas of high prices to give locals who would not otherwise be able to afford to buy in their local area a chance.

You may find experienced newbuild brokers know more about it as they would have dealt with the first sale, assuming this is a re-sale.

Skipton_Building_Society_Representative

Hi! 

There are some instances where we may look at lending on properties with a Section 106 restriction. It would be helpful if we were to ask you some questions regarding the specifics of the Section 106 so we can establish whether or not this fits within our lending policy. 

I would suggest contacting either our social media support pages or our contact centre so we can discuss this further and hopefully be of assistance. 

user1977

Skipton_Building_Society_Representative said:

There are some instances where we may look at lending on properties with a Section 106 restriction. It would be helpful if we were to ask you some questions regarding the specifics of the Section 106 so we can establish whether or not this fits within our lending policy. 

I would suggest contacting either our social media support pages or our contact centre so we can discuss this further and hopefully be of assistance. 

"I am not allowed to tout for business at all"

Hmm...

Helloht

Just updating for those that may come across in future
leeds building society were willing to lend with a 5% deposit they said it was under restricted Covenant under section 106, and was essentially a DMV scheme property (bought at 80% sold at 80%) although it didn’t technically fall into any of their online criteria, they would process the mortgage as the ‘first homes scheme’ and the rate would have actually been very cheap
tsb were also fine although needed I think 15% deposit
the owner of the property originally had a mortgage with Together Mortgages, although rates are crazy high as I think they are mostly an adverse lender but useful to know they will lend on the scheme
The property had 10 offers in the end over 2 days and we offered 10k over the 80% share asking price but didn’t want to go any higher as it would make the full value of the house way over what it is worth so didn’t want to risk the lender down valuing it, and our offer was rejected.