From Andrew Botte
Why is arranging the first purchase of either shared ownership or a housing trust property so easy, but when it comes to remortgaging these properties lenders run away?
Most lenders are happy to finance a final buyout but if a customer is happy staying at, say, a 75/25 split in their favour most lenders shy away.
I have also found that most lenders’ staff can’t get their head around the difference between a shared ownership property and one where a housing trust holds a silent second charge with no rental element being paid. In these instances they make their money on the final buyout and any equity uplift.
When financing these properties the first time do lenders think the contracts are rewritten to confuse them come the time for a remortgage? If lenders took time to read housing association and housing trust restrictions they would see that the terms are there for the protection of all parties including the lender.
It is not good enough for product developers to shy away from this sector due to a lack of knowledge. I remember the same unjustified hesitance in the early days of Right to Buy and now everyone wants a piece of the action.
Surely a good lending book is made up of a good spread of risk from all sectors, both high and low balance. There is a lot of talk from the government about assisting first-time buyers and helping vulnerable sectors, and even more talk from managing director’s of lenders all trying to get their knighthood – but when it comes down to it the people that could help don’t.
It is imperative that when those who are vulnerable want to remortgage they are not boxed into staying with the same lender on potentially an inferior rate, or even possibly a lender’s SVR if their circumstances have changed.
Chase Evans HomeLoans