When buying a property, one of the most significant concerns is financing. Most people opt for a mortgage to fund their property purchase. However, buying a property with a Section 106 agreement can make it more challenging to obtain a mortgage. In this article, we will discuss how to choose mortgage lenders for properties with a Section 106 agreement.
Understanding Section 106 Agreement
A Section 106 agreement is a legal document that outlines the planning obligations that a developer must fulfill when building new properties. These obligations could include requirements such as providing affordable housing, contributing to local infrastructure, and preserving the environment. The agreement aims to ensure that new developments benefit the local community.
When purchasing a property with a Section 106 agreement, it is essential to understand the obligations and restrictions outlined in the agreement. It would be best to seek legal advice to ensure that you understand the implications of the agreement before signing the contract.
Choosing a Mortgage Lender
When choosing a mortgage lender for a property with a Section 106 agreement, it is crucial to select a lender that has experience in dealing with such properties. Not all lenders are willing to offer mortgages for properties with Section 106 agreements. Therefore, it is essential to research and find lenders that specialize in such properties.
It is also crucial to compare the interest rates, fees, and terms of the mortgage offered by different lenders. This will help you choose a mortgage that best suits your financial situation and requirements. You can use comparison websites or consult a mortgage broker to help you find the best mortgage deal.
Factors to Consider When Choosing a Mortgage Lender
When choosing a mortgage lender, several factors need to be considered. These include:
Experience
It is important to choose a lender that has experience in dealing with properties with Section 106 agreements. Lenders that are familiar with such properties are more likely to offer favorable mortgage terms and conditions.
Interest Rates
The interest rate is one of the most significant factors to consider when choosing a mortgage lender. Compare the interest rates offered by different lenders to find the best deal. However, do not make the interest rate your only consideration, as other factors such as fees and terms are equally important.
Fees
Mortgage fees can vary significantly between lenders. Some lenders may charge application fees, valuation fees, and legal fees, among others. Make sure to compare the fees charged by different lenders to avoid paying excessive fees.
Terms
The terms of the mortgage are also essential. Consider factors such as the repayment period, early repayment charges, and flexibility of the mortgage. Choose a mortgage that offers favorable terms that suit your financial situation and requirements.
Documents Required to Obtain a Mortgage for a Property with a Section 106 Agreement
When applying for a mortgage for a property with a Section 106 agreement, you will need to provide several documents. These include:
Proof of Income
You will need to provide proof of your income, such as payslips, tax returns, and bank statements. This will help the lender determine if you can afford the mortgage repayments.
Proof of Identity
You will need to provide proof of your identity, such as a passport or driving license. This will help the lender verify your identity and prevent fraud.
Proof of Deposit
You will need to provide proof of your deposit, such as bank statements or a gift letter. The deposit amount will depend on the lender’s requirements and the property’s value.
Proof of Address
You will need to provide proof of your address, such as a utility bill or bank statement. This will help the lender verify your residential address.
The Bottom Line
Buying a property with a Section 106 agreement can be challenging when it comes to financing. However, with the right research and preparation, it is possible to obtain a mortgage for such properties. Choose a lender that has experience in dealing with such properties, compare interest rates, fees, and terms, and provide all the required documents to increase your chances of obtaining a mortgage. With the right mortgage, you can enjoy your new property while fulfilling your obligations to the local community.