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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Can I Purchase a Property with a Deed of Covenant?
Discovering a property that you'd love to buy and finding out it has a covenant can be concerning.
- Does it mean you can't get a mortgage?
- What does the covenant mean you can and cannot do?
- Will it affect the potential resale value of your home?
What is a Deed of Covenant, and What Does it Mean?
In short, a covenant is a condition in the contract or deeds to a property, which dictate restrictions on how you can use the land. For example, it might state that you need to allow access through a footpath, or cannot build on a particular space.
Binding covenants apply to the deeds themselves, so are carried with the property from one owner to the next.
There can be issues, such as if you'd hoped to develop a plot of land, which may not be permissible under the covenant conditions.
Here we'll explore what a deed of covenant means, when it's likely to apply, and how it will impact the mortgage application process.
If you'd like help from an independent team of mortgage broker professionals, get in touch with Revolution on 0330 304 3040, or email us at [email protected].
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Can I Mortgage an Ex-Local Authority Property with Covenants in Place?
Potentially, yes - covenants usually prevent you from building an extension or adding an aerial to the roof, for example.
Provided you don't wish to do anything prohibited by the covenant; there shouldn't be a significant impact on your ability to get a mortgage.
What Happens if I Purchase a Plot of Land with a Deed of Covenant?
A covenant on a piece of land might relate to noise pollution, or ban building works from taking place at particular times.
It is worth considering the terms carefully before applying for a mortgage, as the covenant might restrict you from trading, or operating a business on the site.
In many cases, developers must build affordable housing sold at a percentage of market value - to ensure that affordable homes are always available in that area. Other covenants dictate that the buyer must have been a local resident for a minimum number of years.
Does a Covenant Prevent me from Building on my Land?
It can do, yes. A covenant restricting building rights would carry over to your ownership if you buy it. Therefore you might need approval from the beneficiary of the covenant if you wanted to build.
Sometimes, a disputed covenant is enforced through court action, so if you are considering buying land with a deed of covenant, it's advisable to seek independent advice before moving forward.
How Can I Protect My Rights Against a Deed of Covenant?
In some cases, the covenant might be invalid - you can apply for such a declaration from the Lands Tribunal service.
However, this can take a long time and be very costly, so indemnity insurance is another option, a type of policy to safeguard against potential legal action costs.
There are many indemnity insurance products, and it can be more expensive and more specialist if the property is unusual or built from non-standard materials.
Will a Restrictive Covenant on My Property Prevent me from Getting a Mortgage?
A lot depends on what the covenant says - some mainstream lenders will steer clear of covenant properties because there is a risk to the resale value should they ever need to repossess the property.
Mortgage costs can be higher, and you might need a larger deposit to offset the lender's risk.
What is a Personal Covenant in a Mortgage Agreement?
This means that the mortgage includes an agreement between the borrower and the lender.
Therefore, if the borrower breaches the terms - i.e. doesn't make the repayments - the lender has the right to take legal action.
Can I Look Into Who the Beneficiary of a Property Covenant Is?
Yes, a professional advisor can look into the covenant's beneficiary, usually the existing landowner, but sometimes another person or a business.
Professional Advice on Mortgaging a Property with a Covenant
Covenants can be complicated and challenging, so it is vital to seek professional advice from an independent broker who can guide you through the pros and cons, and establish the best lending option for your mortgage.
Contact business loan broker on 0330 304 3040, or email us on [email protected] to arrange a good time to discuss the terms of your covenant, and decide on the best way forward.
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As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.