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Specialist Support & Advice For Your Future Section 106 Mortgage
Section 106 properties are usually easier to afford, but can be harder to find mortgages for. Luckily, our expert team is here to show you the way and help you find lenders more willing to provide you with the mortgage finance you need.
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Finding The Best Section 106 Properties Mortgage Deal For Your Circumstances.
Section 106 (S106) is a planning obligation placed on homes that require certain rules to be followed when purchasing, maintaining or selling a property. These arrangements can make some mainstream lenders feel wary, but When the Bank Says No works with many specialist lenders who are more comfortable with lending on properties with section 106 agreements.
These mortgage lenders will look past the circumstances surrounding the section 106 and instead focus on your situation. Your income and credit history is often more important to specialist mortgage providers than the property you’re considering purchasing.
Whilst you may have access to a smaller panel of lenders than other mortgage applicants who may benefit from both mainstream and specialist lenders, you can still achieve the finance for your Section 106 home. Our experienced advisors are here to help you navigate the complexities of S106 agreements, and find the right solution every time.
Stress-Free Section 106 Mortgages.
Section 106 is a valuable piece of legislation, helping those who may struggle to afford a home on the open market achieve their home-owning dreams. But the process of finding a mortgage for this kind of property can lead to a lot of stress. As an experienced mortgage broker, we know the mortgage market inside and out, and won’t take no for an answer. If you believe yourself to be eligible for a S106 agreement home, we’ll help you find your mortgage solution.
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What Is A Section 106 Agreement?
Section 106 is a legally binding agreement between the relevant parties — consisting of the Local Authorities and developers seeking planning permissions — setting out the measures that must be undertaken to manage the impact new builds will have on the local area and local services. Essentially, S106 Agreements, as set out in the National Planning Policy Framework, make it a condition that any new development work outlined in a planning application must have a tangible benefit on the local community or provide notable infrastructure improvements. These planning obligations are sometimes known as affordable housing levies and are aimed at meeting the cost of providing new infrastructure for an area. Such properties are more affordable for local families typically.
In order to make a development acceptable, developers may be asked by the local planning authority, as part of their planning obligations and site mitigation, to pay a community infrastructure levy. This is a financial contribution to help fund local infrastructure, facilities and services, such as public open space, education, highways, recreation and more affordable housing – not necessarily for purchase. While these can be viewed as positives, there can also be an impact on those who are seeking to purchase a property subject to a S106 agreement.
Section 106 agreements have enabled numerous affordable properties to have been built all over the UK, helping those with lower incomes get their foot on the property ladder. However, the mortgage application process for a S106 property can often be more complex.
What Is A Section 106 Property?
A Section 106 property is subject to a legally binding agreement that intends to make housing affordable in the local area. As part of this, there are likely to be strict regulations as to how the property can be sold.
- A maximum percentage of the market value that it can be sold for.
- A ‘re-sale price discount’ requirement if it is sold to a first time buyer.
- Limits on who can buy the property (e.g., first time buyers, certain professions, within a certain radius).
- A requirement to get Local Authority approval.
If you’re looking to purchase a S106 property then it’s often good to seek legal advice or the support of an experienced mortgage broker to find the best mortgage deals for you. Traditional mortgage lenders require a larger deposit on average when lending for a S106, if they’re happy to lend at all. Work with our mortgage brokers and we’ll find you the perfect deal for your circumstances.
Turning Your Nightmares Into Dreams Realised
When you think you’ve hit that brick wall and have all but given up hope of finding mortgage finance, When the Bank Says No are here to turn your ‘No’ into a ‘Yes’. We have access to a range of specialist lenders who are willing to help those that the High Street banks just won’t touch. Get in touch today and see how we can turn your dreams into a reality.
Can I Get A Mortgage For Section 106 Property?
As long as you fulfil the Section 106 buyer criteria, you can get a mortgage and purchase a property subject to this agreement as your principal residence. It’s important to bear in mind, though, that there are lots of variables to consider for lenders, and this added complexity may put many off.
As a result, you are likely to face a more restricted choice when searching for an appropriate mortgage deal. Lenders who are prepared to consider you may require a larger deposit or charge you higher interest rates – but this is not always the case and we’ll make sure you have every possible option at your fingertips! Contact our expert affordable housing mortgage advisors today and we can get started.
What Is Affordable Housing?
Affordable housing refers to homes that are made available at a reasonable or discounted price to those who ordinarily would be unable to afford a home on the open market. Many affordable housing schemes are designed for first-time buyers to help them get onto the property ladder.
Section 106 Agreements are linked to planning permission and may be made between developers and Local Authorities to ensure affordable housing is included in any development project to benefit the local community. Once built, these affordable homes will be subject to strict selling criteria. If you’ve got your heart set on buying a home but are struggling for cash, a Section 106 property may prove a more affordable option for you. Talk to us today and we’ll chat through S106 eligibility criteria and begin the mortgage hunt on your behalf to find lenders willing to offer you the best possible deal!
Frequently Asked Questions
Who normally qualifies for a Section 106 or Affordable Homes Agreement?
The criteria to qualify for a Section 106 property can vary depending on the exact requirements set out by the agreement. Some agreements might restrict re-sale to those with a local connection or within a certain area, within a certain profession (e.g. key workers) or to first time buyers only.
Beyond these rules, there are a number of other eligibility criteria that must be met:
- You must have a permanent job and work over 16 hours a week or have a firm job offer within the local area.
- You need to have lived in the UK for at least 3 years immediately prior to your application.
- You must need affordable housing – this will be assessed by your Local Authority, taking into account your savings, income, mortgage and other property.
If you’re not sure if you’re eligible for a Section 106 agreement property in your area, it can be a good idea to get in touch with the developer to find out more. If the S106 property is not a new build, however, you can also talk to a solicitor.
Can you ask the Local Authority to remove or negotiate a Section 106 Agreement?
As the property owner, you can look to modify or remove a Section 106 Agreement after 5 years, but there is no guarantee that the Local Authority will allow this. Generally, each new owner or prospective owner will be bound by the agreement.
Section 106 agreements are enforceable by an injunction. In case of a failure to adhere to the conditions of the S106 the local planning authority can take direct action against the person that first entered into the obligation and any subsequent owner, making financing properties of this difficult for lenders with such restrictions in place. That’s why some lenders are less keen.
If you are looking to buy a Section 106 home, a solicitor will be able to give you independent legal advice and explain all the ins and outs of this type of property and what your options are moving forwards. When you’re ready to buy and need a mortgage for a S106 property, our expert team can step in and make sure you’ve got the best available deal for your circumstances!
Can it be hard to get a Section 106 mortgage?
Though it is slowly changing, fewer lenders still offer a mortgage on a Section 106 property. Some lenders are put off by the potential resale value of the property due to some of the restrictive covenant conditions in place.
Many lenders are willing to offer a mortgage despite the presence of an S106 agreement, but they may require a larger deposit of around 15%-20% vs the usual 10%, or insist on higher interest rates to mitigate some of the risk. If you don’t have enough for a deposit of this size, or higher interest rates make the loan unaffordable for you, there are other options. Not all lenders will feel the same about your Section 106 property, and it’s possible to still get approved for a highly attractive mortgage deal – it just depends on your specific financial situation.
If you’re struggling to get an agreement in principle or have already been declined by your lender, contact our team of affordable housing mortgage advisors. We’re here to keep things simple and explain your options in a down-to-earth, straight-forward way.
Can I get a mortgage on a Section 106 property with bad credit?
A Section 106 property and a borrower with bad credit may be enough to put off some lenders, but luckily, not all. There are a range of specialist lenders out there who will allow you to purchase a property bound by this agreement, even with an adverse financial history.
Your options will inevitably be more limited, but with the right advice, there is no reason why you shouldn’t achieve a highly suitable mortgage deal. When you get in touch, one of our specialist advisors will go through your credit report with you (so make sure you have it ready!) and explain the best way forward. From taking steps to improve your score to locating lenders who are more understanding, we take a holistic approach to mortgage advice, ensuring you get the deal you deserve in the end.
How can a mortgage broker help me get approved?
Our mortgage brokers are experts in tricky property sales, and section 106 properties are an example of that. Because they’re experts they know which lenders are more likely to lend to you with more favourable terms.
Higher interest rates and a larger deposit against the property value are to be expected when you require a section 106 mortgage, but they don’t need to be extreme. Let When the Banks Says No help you get the perfect deal for your circumstances today.
Experienced Section 106 Property Mortgage Advisors.
When the Bank Says No has helped clients all over the UK achieve the finance they need to purchase a Section 106 property. Though this planning obligation can make the mortgage process trickier, there are plenty of options still open to you. Whether you’ve been struggling for a while or have just started the search, our friendly team will make sure you have all the information and tools at your disposal, setting you up for application success. Don’t let Section 106 stress you unduly; When the Bank Says No is here to find your yes!
What Our customers say about us
Our Customers rank us 4.6 out of 5
We feel so fortunate to have found WTBSN
We found WTBSN after landing in a really tricky situation. We were out of term on our current mortgage and our existing broker had exhausted all options to re-mortgage due to the complex nature of our holiday let property (Grade II listed, timber frame construction and above commercial). Working under considerable time pressure due to the financial penalties being imposed by the existing lender, Brian was relentless in his search for a solution that would allow us to refinance a property that was on face value mortgageable. Thankfully, he didn’t give up and nine months later, we completed on the re-finance. We feel so fortunate to have found WTBSN and would like to thank Brian and the team sincerely for going the extra mile. We couldn’t have done it without you!
Rachel Reeves
Simply the best
I will never use another mortgage broker in all my time In property, these guys are the best at communication, customer service and keeping you informed. They are a level above every other broker I’ve come across and they actually get things done.
Emma, Samantha & Ashley have been fantastic in assisting me with 2 mortgages now and they’re superb at what they do. I wouldn’t hesitate to reccommend them to anybody out there who needs a mortgage sorting.
John Burton
I have been dealing with ben
I have been dealing with Ben @ When The Bank Says No. He has been great!! Professional, kept us up to date the whole way and made the entire process so simple. I would most definitely use him again and have already passed his details on to a family member. Thank you for all your help.
Elise
Thank you for your amazing support
Thank you for your amazing support and service during a really difficult time in my life. 5* is just not enough to demonstrate the level of support received. These guys go above and beyond. A personal service, with kindness and compassion. I highly recommend. If you’re struggling with your mortgage, then have a chat to this team. I cannot thank them enough for everything they have done.
Nabila Fowles-Gutierrez
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