Further Instructions to Solicitors
Shared Equity (Re-mortgage)
These instructions relate to shared equity lending where the borrower(s) is/are re-mortgaging only and are in addition to the Society’s edition of the BSA Mortgage Instructions. For additional instructions relating to shared ownership lending, please see the Society’s ‘Further Instructions to Solicitors – Shared Ownership’.
Where the Society is prepared to lend under the Government’s Help to Buy: Equity Loan Scheme, the arrangement for the equity loan must be through either a Registered Housing Association, Registered Social Landlord or through a Government or Local Authority approved and funded scheme.
Where an existing Shared Equity Loan is to be used in respect of a re-mortgage of a property in conjunction with a West Bromwich Building Society mortgage, the Society’s additional requirements are:
- The borrower must pay or has paid a percentage of the full open market value (e.g. 75%) but must acquire ownership of 100% of the property on completion.
- The remaining balance (e.g. 25%) must be made up by means of an equity loan from an equity sharing lender which is secured by a second charge ranking subsequent to a secured first charge in favour of the Society. The cumulative borrowing must not exceed 100% of the value of the property.
- The existing charge in favour of an equity sharing lender must be postponed to the new mortgage in favour of the Society.
- Any future change in the value of the equity in the property (excluding any increase the direct result of home improvements carried out by the borrower), on a disposal or sale, will be shared between the borrower and the equity sharing lender in the relative percentages, the equity sharing lenders rights being secured by the terms of the second charge.
- No rent, fee or other payment is paid by the borrower in respect of the equity sharing lender’s percentage.
- The repayment term of the borrower’s agreement with the equity sharing lender must be at least the term of the mortgage.
- On disposal of the property, or earlier on expiry of the term of the borrower’s agreement with the equity sharing lender, the equity sharing lender’s percentage must be repaid.
- Any ‘buy out’ of the equity lender’s percentage permitted under the equity sharing scheme in favour of the borrower prior to the expiry of the term of the borrower’s agreement must be at current open market value.
- The Society will only lend on a shared equity basis where a shared equity product has been selected. In the event that a shared equity product is not specified in the offer of loan then this should be reported to the lender.
- The Society must have the ability, as mortgagee in possession, to sell the property on the open market and at full open market value, with access to 100% of the equity of the property in satisfaction of its charge, and free of any restrictions in this regard.