Mortgages to buy your property
Mortgages to buy your property
Most shared owners have a mortgage to help buy the share of the property they own.
A mortgage is the money you borrow, from a bank or building society, to buy your home. Your home is used as security for the loan. You repay the money in instalments; over a contracted period of time. If you don’t keep up your repayments, the lender can take your property.
If you have difficulty paying your mortgage, you should contact the lender immediately.
Making changes to your mortgage
It is likely you have taken out a mortgage to buy your share of the property. In some cases, you must let us know if you make changes to your mortgage.
Priority of charges
Almost all mortgage lenders require a ‘first charge’ on the property. If you don’t pay the instalments due, the lender can sell your property and take what is owed to them from the sale.
With shared ownership, we own a share of the property and will need to consent to any charges on the property to protect our interest.
From time to time you may wish to re-mortgage or borrowing more money to improve your property. There will be rules applied to what you can use a re-mortgage sum for so please check with us before you apply to borrow more money.
Most shared ownership leases state that you must get our written agreement before you can re-mortgage or receive a further advance secured on the property.
We must also approve the amount and the mortgage lender. We do make a charge for re-mortgaging administration.
Mortgage protection clause (MPC)
This clause sets out the protection given to an approved lender should you fall into arrears and the lender must repossess the property and sell it in order to repay the mortgage.
This clause guarantees that the lender will get back all the money that it lent you together with certain other costs.
If we must pay any sums due to the lender in respect of your mortgage, because of the MPC claim, you will be responsible for paying back to us whatever we have had to pay to the lender.
The MPC encourages lenders to lend on shared ownership schemes and avoids the need for the lender to get a mortgage indemnity guarantee, which you would have to pay for.
The clause does not cover all borrowing such as debt consolidation, equity release and improvements not related to covenants (rules) in the lease and the borrowing must be approved by us before the money was lent.
We will usually give consent and approval if we are satisfied that the risk to us is limited; in other words, that your equity share is enough to meet all the secured borrowings. We will not usually give consent for things that fall outside the mortgage protection clause.
If you change the type of mortgage you have with your existing mortgage lender for example change from a variable to a fixed rate of interest, but the loan amount says the same, you will not need our permission.
If you are seeking to borrow more money to buy a bigger share of your property, we will consider this as part of the staircasing proces.