When buying a property, you may come across terms that aren’t familiar at first glance. One of these is a section 106 agreement. While it sounds like complicated legal jargon, it’s an important part of the planning process and can sometimes affect your ability to get a mortgage.
At Key Mortgage Advice, our mortgage brokers can help you understand what this means in practice, and guide you towards the most suitable mortgage options for your circumstances.
For expert advice and mortgage solutions you can trust, fill in our contact form today
What Is A Section 106 Agreement?
A section 106 agreement, also known as an S106 agreement, is a legally binding contract between a property developer and the local planning authority. Its purpose is to make sure that new housing developments contribute to the local community.
For example, the agreement may require a developer to include a percentage of affordable housing, provide green spaces, or make financial contributions towards local infrastructure like schools, transport or healthcare facilities.
For buyers, this means that certain properties carry specific obligations or restrictions set out in the agreement. In some cases, these restrictions mean only local residents are permitted to buy or live in the property, or they may prevent the home from being rented out or used as a holiday let. This is particularly common in areas such as the Lake District. While this ensures the development benefits the wider community, it can also make the mortgage process more complex.
Why Can A Section 106 Agreement Affect A Mortgage?
When you apply for a mortgage, lenders assess the property as much as they assess you. If the property is subject to a section 106 agreement, it may carry restrictions such as limits on who can buy the home or conditions on resale. From a lender’s perspective, this can make the property less straightforward to value and sell in the future.
Some high street lenders are cautious about lending on these types of properties, as they view the restrictions as an additional risk. That doesn’t mean it’s impossible to secure a mortgage, but it often requires expert advice, and in some cases, access to specialist lenders who understand how these agreements work.
Our mortgage brokers in Preston, Garstang and Southport regularly work with clients facing this situation. We know which lenders are open to applications involving section 106 agreements and can present your case in the best possible light.
For more information about our services and access to lenders, call us on 01772 620000.
Does It Vary By Mortgage Type?
The impact of a section 106 agreement can differ depending on the type of mortgage you’re applying for.
- First time mortgages may be affected if the property is part of an affordable housing scheme with specific buyer restrictions. In some cases, homes may be available under section 106 discount to market schemes, where properties are sold below market value to keep them affordable for eligible buyers.
- Buy to let mortgages could be harder to secure if rental of the property is limited by the terms of the agreement.
- Commercial mortgages for mixed-use or development projects may also come with planning obligations that influence funding options.
- Lifetime mortgages and later-life lending may be more cautious, as future sale restrictions could affect long term value.
- Remortgages are possible but may require specialist lenders willing to take on a property with ongoing obligations.
Because every lender has a different criteria, navigating these options alone can be difficult. Our experienced mortgage advisors provide clear, practical guidance so you can understand your choices across the full range of mortgage services.
How Our Mortgage Brokers Can Help
Securing a mortgage on a property with a section 106 agreement requires more than just finding a lender willing to lend. It’s about understanding the details of the agreement, assessing its impact, and matching you with the right lender for your needs.
Our award-winning team takes the time to review your situation and explain what the agreement means for your mortgage application. With access to the whole of the market, we can approach lenders that are more flexible with these cases.
Whether you’re looking for a first time buyer mortgage, remortgage, or even exploring buy to let mortgages or commercial mortgages, we can help you find an option that works. Working with us also saves you time and stress, as we handle communication with lenders and solicitors on your behalf.
If you’re unsure about affordability, you can use our mortgage calculator to get an initial idea of repayments before speaking to one of our advisors.
With offices in Preston, Garstang and Southport, many clients choose us as their trusted mortgage brokers for our local knowledge and straightforward advice.
To discuss your situation and how we can help, email us at enquiries@keymortgageadvice.co.uk.
FAQs
Can I Get A Mortgage On A Property With A Section 106 Agreement?
Yes, but it can be more complicated. Some mainstream lenders may be cautious, so working with mortgage brokers like us gives you access to specialist lenders who understand these types of properties.
Does A Section 106 Agreement Only Apply To Affordable Housing?
Not always. While many S106 agreements involve affordable housing, they can also cover contributions to infrastructure or other community benefits. The key is to check what conditions are attached to the property you want to buy.
Will A Section 106 Agreement Affect Selling My Home In The Future?
It can. If there are restrictions on who can buy the property or conditions on resale, it may take longer to find a buyer. This is one reason lenders are cautious, and why advice is so important before committing.
Do All Mortgage Lenders Accept Properties With A Section 106 Agreement?
No, some lenders will decline applications outright, while others may agree but impose stricter terms. Our advisors know which lenders are more open to these situations and can help you find the most suitable option.
Clear Mortgage Advice You Can Trust
A section 106 agreement doesn’t have to stop you from buying your ideal property, but it does make expert advice essential. We provide clear, professional guidance to help you understand your options and secure a mortgage that suits your needs.
Whether you’re a first time buyer, looking to remortgage, considering a buy to let mortgage, or exploring lifetime and commercial mortgages, our team is here to support you at every step.
Contact us today on 01772 620000 or email us at enquiries@keymortgageadvice.co.uk to discuss your mortgage options.
