Re mortgaging

Remortgaging and additional borrowing – a guide for Octavia Housing leaseholders and shared owners

There are many mortgage deals available. We know that as a homeowner you may want to take advantage of them. Because we have a financial interest in your home, it is important that we are aware of and agree to any changes in your borrowing arrangements.

This guide explains our procedures and conditions for home owners who want to do this.

Your options

There are three possible things you may want to do:

• remortgage - move from your existing lender to another lender, but without increasing your borrowing
• further advance - stay with the same lender, but borrow an extra amount
• remortgage and further advance - change lender and borrow an extra amount

Once you have carefully considered and decided what you would like to do, you should consult a financial advisor or mortgage lender to discuss your lending needs.

If you are a shared owner you will need our permission to remortgage. Please contact us before you make any arrangements with your lender as if we refuse permission you may lose any fees paid to the lender.

Leaseholders do not need permission but do need to tell us of changes. We charge approval and completion fees to cover our administrative costs.

What shared owners need to provide

Remortgage

If you’re applying to remortgage, we need the following:

• a copy of your mortgage offer from your proposed new lender
• written confirmation of the current value of your home from your new lender (you can usually get this from the mortgage offer)
• written confirmation from your current lender confirming the outstanding balance (also known as a redemption statement), and
• written explanation from you telling us why you want to change your lender.

If you are staying with the same lender and just changing interest rates, we do not normally need to approve this. If in doubt, please contact us to discuss.

Further advance

If you’re applying for a further advance, we need the following:

• a copy of the offer from your lender confirming how much you want to borrow
• written confirmation of the current value of your home from your lender (you can usually get this from the further advance)
• written confirmation from your lender confirming the current outstanding mortgage
• a written explanation from you telling us why you want to increase your borrowing, giving details of any home improvements you plan to make, together with quotes, invoices or receipts for the work being carried out.

Please note, we do not approve further advances for the following:

• consolidating unsecured personal loans or debt
• purchase of non-housing items e.g. cars or holidays
• you have arrears on your account (except in exceptional circumstances)

Remortgage and further advance

Please provide:

• a copy of your mortgage offer from your proposed new lender
• written confirmation of the current value of your home from your new lender (you can usually get this from the mortgage offer)
• written confirmation from your current lender confirming how much is outstanding on your mortgage
• a written explanation from you telling us why you want to increase your borrowing, giving details of any home improvements you plan to make, together with quotes, invoices or receipts for the work being carried out.

Shared owners - When you are ready to proceed

Sending all the information we need to process your request will ensure that your application is processed as quickly as possible. We are only able to process your application once we have received all these documents.

• Have you enclosed a copy of your remortgage or further advance offer?
• Do your documents include a current value of your property?
• Have you enclosed confirmation of the existing balance outstanding on your mortgage (redemption statement)?
• Have you provided written confirmation for why you are applying to remortgage or for a further advance? (If you are borrowing money for home improvements, we will need quotes and details of the work to be carried out).

Leaseholders - When you are ready to proceed

If you are a leaseholder (ie own 100% of your property) you do not need our permission to remortgage or get a further advance. You must however, let us know about your intentions.

You will need to pay an approval fee and a completion notice of charge fee. We will approve your loan within five working days of receiving your approval fee. Your solicitor must notify us when your remortgage or your further advance arrangements are finalised. You must pay us a completion notice of charge fee within 10 working days of the arrangements being finalised.

As a leaseholder, you do not need to let us know if you are staying with the same lender and borrowing the same amount, but changing the type of mortgage (e.g. from fixed to variable interest).

Once we have all the information we need, we will tell you of our decision within ten working days. If your application is successful, we will also inform your lender.

Frequently asked questions

How much can I borrow against the value of my home?

You can borrow up to 95% (in exceptional circumstances only). We normally approve where the loan is no more than 90% of the value of your home to protect Octavia from reductions in the value or the effects of the Mortgagee Protection Clause where interest and costs of the mortgagee can be claimed from our share of the property in the event of re-possession.  For example, if your home is valued at £200,000 and you own 25%, you can borrow up to 90% of the £50,000 (in this case, £45,000). This includes your existing mortgage and any other loans secured against your home.

Are there likely to be any other costs involved?

Your lender may charge fees for dealing with your mortgage application or using solicitors. You should contact them directly for details of their fees.

If your lender is not able to provide a valuation, we can arrange one. We will contact you if this is the case and let you know how much you have to pay.

In rare cases, we may have concerns about a part of your application, and choose to contact our solicitors for their advice. We’ll let you know if we decide to do this as we will pass on any solicitors costs to you.

What is the mortgage protection clause (MPC)?

The MPC is covered in your lease. It means that your lender could recover certain losses from us if they ever have to repossess your home. We cannot extend the MPC to cover extra borrowing unless it is for staircasing, transferring equity (for example, if a couple separate and one person ‘buys out’ the other) or necessary improvements to the structure of the property. The limits of the MPC may be an issue for some lenders. It is worth checking this with your lender at an early stage of your application.