Shared Ownership & IVAs...

Brightbird97

Hello

My boyfriend had an IVA from beginning 2019, has been discharged (Feb 2022) from the IVA & is still paying it back. I have spoken with 5/6 brokers who say they is not a lender who will offer. I don't understand this, surely if paying things back, no other debts/defaults.. surely S/O is better for lenders as the risk is 'lower' as they are not lending the full amount?? Is there anyone who may know a lenders who specialises in this please.

user1977

Brightbird97 said:

surely S/O is better for lenders as the risk is 'lower' as they are not lending the full amount??

It's not really going to make a difference as in a repossession the lender is only selling "their" share (and the landlord is selling, or retaining ownership of, the rest) - so if they are lending 90% of the value of a, say, 25% share, it's no less a risk than lending 90% of 100% of a property.

eddddy

Brightbird97 said:

 surely S/O is better for lenders as the risk is 'lower' as they are not lending the full amount??

As above, if a mortgage lender repossess, they don't get the whole property - only your share of the property.

So I think it's probably the other way around - Shared Ownership repossession is probably messier than 'standard' repossession.

The bank will be repossessing a share of the property - e.g. 25%, 50% etc. The Housing Association will still own the remainder.

So the mortgage lender has these options...

• They can ask the housing association to buy back the mortgage lender's share  - but the housing association might refuse

• They can ask the housing association to nominate a suitable shared-ownership buyer - but there may not be any suitable buyers at that time. 

• The mortgage lender can staircase to 100% and sell the property on the open market

Which may be extra hassle for the bank.

Brightbird97

Thank you both for your input, it makes more sense now.

I am just looking for a lender that might consider us all things considered and proving really difficult. Please throw any way if you have any suggestions!

kingstreet

Kent Reliance says;-

"IVA/bankrupts who have been discharged over 3 years ago and who have no residual debt may be accepted subject to individual case assessment."

Leeds says;-

"Bankruptcy / Individual Voluntary Arrangement (IVA): The Society does not accept applications for individuals who are subject to:  A Bankruptcy Order unless discharged more than 6 years ago.  An Individual Voluntary Arrangement, unless discharged more than 6 years ago.  Previous property repossessions, unless greater than 6 years ago."

These are probably the two best-known shared ownership lenders, especially for high LTV newbuild cases.