Switching Affordable Housing mortgage?

I

intermission

Registered User
Messages
51
Has anyone any experience of switching an affordable housing mortgage from one finanical institution (not the council) to another? If so, is it straightforward?

I'm with BOI, who gave me a great discounted fixed rate for the first year (2.95%), after which I will move onto their regular tracker (ECB +1.25 = 4.25% at today's rates). The first year is nearly up and 4.25% isn't looking too appealing compared to some of the other offers around e.g. BOSI switcher mortgage - Discounted rate of 3.45% for first 2 years, then 4% thereafter.

My query is whether such a switch is possible, and if so can you only switch to another lender who offers affordable housing mortgages (e.g. EBS, IIB... not sure if there are others?) or can you switch to any mortgage provider?
 
I don't think it matters that the property in question is 'affordable'-presumably the mortgage process is the same as for any other property?
 
I think there is a slight difference with an 'affordable' mortgage as the provider has to accept that the council has the right to clawback their % in the event of something going wrong down the line (e.g. reposession). I'm not sure if all lenders would be willing to sign up to that.
 
you can switch an affordable housing loan to any lender , so long as there is sufficient equity in the property to repay the existing mortgage plus the councils clawback. ( as you obtained the property at below market value, the clawback ensures that people are not using the affordable housing system to profit in the short term from selling the property at market value say a year after they purchased it at discount).

At the moment the only lenders doing affordable housing mortgages are BOI, EBS and IIB. In order to switch the mortgage to another lender, the council have to be fully discharged from any interest in the property, so the claw back that applies if you sell the property, also applies if you wish to re mortgage. apart from the lenders detailed above, no other lender will allow the council retain an interest in the property ( i.e the claw back).

work out the market value of your property, if the balance on the existing mortgage plus the claw back is less than 90% of the current value of the property you will be able to re mortgage with any lender. its worth noting, that councils always say to people, " you don't have to repay the claw back to re mortgage" however they seem to not take into account that lenders with the exception of EBS, IIB and BOI, will not take a property as security with the council retaining an interest by way of a clawback for the first ten years.
 
Thanks for the info Molly. Just to clarify from what you said above, if I wanted to switch to a different lender (other than EBS, IIB, BOI) then I would effectively have to 'buy out' the councils clawback % and incorporate it into a new mortgage?
 
Yes you would, the Councils clawback has to be repaid in order for antoher lender to take full charge over the property.
 
You must log in or register to reply here.
Back
Top