Tiesto
Member
Registered: 6th Jun 02
Location: Hinckley, Leicestershire
User status: Offline
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Have wanted to move out for a while and what with the recent price drops and this incentive its now possible for me to actually do it.
Basically you only get a mortgage out for 75% of the value and the other 25% is kept by the developer, but legally you own 100% of the house. After 10 years you have to pay that 25% back to the developer, basically when you sell that 25% goes back to the developer as wont be staying in one place for 10 years! Or remortgage at that stage and pay them off.
House i want is £99,950, so only need mortgae of £75k which ive been offered by a provider.
Anyone done this sort of thing? Any draw backs should be aware of?
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dannymccann
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Registered: 9th Aug 06
Location: Doddington, Lincolnshire
User status: Offline
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Im not too sure on the details you are after but can you link up where you are looking, hoping its near me because I am interested in these as well.
AFAIK Dean_W seems to know about these
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AndyKent
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Registered: 3rd Sep 05
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Only draw back is that house prices are pretty unstable ATM.
I'm pretty certain that in the next 6 months prices aren't going to rise. At best they'll level out, at worst you'd buy a new house and its value will drop off when you could have got it for cheaper.
Plus most new-build houses are pretty shoddy for workmanship TBH.
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Cosmo
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Registered: 29th Mar 01
Location: Im the real one!
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Let me get my head round this...
You buy a house for £100k and you only need to pay £75k - but you own it all. Got this down.
In 10 yrs time (if you're still there) you have to pay them this £25k - OK understand this bit.
What if you sell within the 10yrs? Do you have to give them £25k, or do you have to give them 25% of the sale price?
Either way its probably going to totally wipe out any rise in house prices during that time (if not mean you owing money) so moving up the ladder is going to be dependant on getting a bigger mortgage.
Sounds like a good idea to get into your first house, but doesnt sound like its a good plan down the line if you are going to move out before 10yrs (thats if Ive understood it right!).
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bishbosh
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Registered: 25th Sep 06
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in 10 yrs if the value of the house has reduced then so will the value of the 25% that u owe. so i guess it will kind of protect a possible fall in prices.
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AndyKent
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Registered: 3rd Sep 05
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quote:
Originally posted by bishbosh
in 10 yrs if the value of the house has reduced then so will the value of the 25% that u owe. so i guess it will kind of protect a possible fall in prices.
Don't think so. I'm pretty sure the 25% is agreed and fixed when you buy the house, so you don't owe the developer 25% of its value, you would (for example) owe 25k, regardless of what happens in the future.
The alternative would be for the hosue to be re-valued after 10 years and you owe them 25%, but in a 'normal' market you'd end up paying back a quater of it appreciation in value (perhaps 35k for example).
As Cosmo, either way you're loosing out a bit, but it might help you in the short term. As said yesterday, I'd hold off for at least 3 to 6 months and see whether there are any more falls in value (likely).
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Tiesto
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Registered: 6th Jun 02
Location: Hinckley, Leicestershire
User status: Offline
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its 25% of the value if and when you come to sell it. So could go up or down.
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