Missing mortgage protection clause and indemnity insurance

vaxlt

FTB, buying a maisonette with share of freehold. Lease does not have mortgage protection clause and management company refused to do deed of variation, my solicitor asked our lender (Halifax) to accept indemnity policy.

We are waiting for the answer from the Halifax, but should we be worried? How often banks refuse it? This is last step in buying and it stresses me out horribly.

eddddy

Presumably it's because the ground rent is over £250 (or over £1000 in London). If so...



As it's a 'share of freehold', the joint freeholders' attitude sounds a bit worrying.

Why won't they help one of their own group by providing a Deed of Variation? Did they offer an explanation?

A standard mortgage lender protection clause shouldn't have any real negative impact on the joint freeholders.

As it's a 'share of freehold', it's also surprising that the joint owners didn't reduce the ground rent to zero - and extend the leases to 999 years. Then the problem would have gone away.

Not reducing the ground rent to zero in the first place suggests that the joint freeholders are 'amateurish'. Refusing to do a Deed of Variation suggests that the joint freeholders are either 'difficult' or 'lazy'.  That kind-of rings alarm bells (unless there is some special explanation). Are they going to be difficult to deal with going forward?


But to answer your specific question - most mortgage lenders will accept indemnity insurance.

vaxlt

This is strange part - ground rent is 1 pound per year.

Response from residents managements company was they dont think its needed because no one else has done it before. It is a private estate on private road and I don't think there is a lot of movement so they might be just out of date. Our backup plan if Halifax will refuse is ask seller to apply preassure to them since they are shareholders. It just causes unnecessary stress now till we wait and overthink everything. 

eddddy

So what is the mortgage protection clause for? What does the mortgage lender need to be protected against?


I was guessing it was a "ground rent over £250" issue...
There's also the rentcharge issue... but that shouldn't apply to a leasehold property.

vaxlt

A mortgagee protection clause prevents the landlord from forfeiting a lease without first serving written notice on the lender of its intention to do so

erdelipeter17

Hi 
did you get an outcome, we are selling but stuck in the same situation days before we meant to exchange, my solicitor is stating the buyers solicitors made an error regarding how they reported the service charges to the lender (santander)