Mortgages

[Sambatiki]

Hi there,

Just wanted a bit of advice.

We're currently in the middle of buying a shared ownership house and its now looking as though its going to fall through as there is a clause in the lease that the bank aren't happy with. They have known about this clause before they issued the offer but its still looking pretty bleak.

We have a meeting on Thursday with the housing association to discuss what is going on... but I doubt anything can be resolved

We've been looking and have seen another property that we would like to put an offer on should this house fall through. My question is that if we did want to persue this, would we have to get a brand new mortgage or could we still use the offer we have in place? The mortgage on the new house is cheaper....

Hope you can help xxx Thanks

 

[Lisa40]

Hiya

what's the clause in the lease that they aren't happy with?

With regards to the new house, the mortgage will still be valid as long as the new house is appropriate security for the loan, ie you'll need a new valuation on the new property and all of the legal side will need to be completed again with regards to the new house.

Hope this makes sense. Feel free to PM me, I am a qualified financial advisor
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[Sambatiki]

Lisa - Thanks so much. Its the protected area clause. It seems that although the Homes and communities Agency had an agreement with lenders that they would lend against this clause but they have now had a change of heart.

Details below

The terms of your lease allow you to acquire 100% of the leasehold interest of the property, but never the freehold. If you want to sell when you own more than 80% of the property, you must offer a surrender to the landlord. The landlord will either accept the surrender (and pay you the market value for your share at that time) or will nominate a Housing Association or Registered Social Landlord to buy your share.



However, Leeds Building Society require a provision that allows them to sell on the open market to who ever they see fit after a period of no more than 12 weeks should they repossess the property. The lease currently does not provide for this and it is highly unlikely to be changed to meet this requirement.



The draft lease is as per the Homes & Communities Agency model lease. The model leases for shared ownership and for protected areas properties were created with the guidance of those lenders who were prepared to lend on affordable housing, All Housing Associations now use those model leases when selling the leasehold interests in the affordable properties. However Leeds don’t seem to want to accept the model lease here.



We have asked the Housing Association’s solicitor if they are aware of any other difficulties from lender’s on this development, and if the Housing Association would be able to assist in satisfying the Leeds’ concerns and await hearing further.

 

[Lisa40]

Hmmm interesting!

Who do the current owners of the property have their mortgage with? If you really want that property could you change to the other provider?

I can see why the bank would want to be able to sell on the open market but this looks like that is only restricted if you own more than 80%. How much will your share be? Could they pit a condition in that you won't purchase more than the 80% which would ensure they could still sell on the open Market?
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[Sambatiki]

Its a new build Lisa, the people who would be our next door neighbours have also been told that they wont lend against it either.

Our starting share would be 60%. Im not sure about putting a proviso in... will ask our solicitor.

Thanks very much for your help and suggestions x

 

[Sambatiki]

Oooh I didnt notice your ticker gets turned off automatically in here.

 

[Lisa40]

How odd about the ticker thingy lol!

& if they are new build & all potential buyers are having problems then it might well prompt them to amend their lease conditions or they'll have an estate full of unsold houses lol.

Hope it works out for you whatever you decide to do
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[Sambatiki]

Thanks Lisa xxx