Whittie
Member
Registered: 11th Aug 06
Location: North Wales Drives: BMW, Corsa & Fiat
User status: Offline
|
http://www.rightmove.co.uk/property-for-sale/property-15968682.html
As the title really, what would happen if you bought that property?
What would happen when you come to sell it?
Can you only live in shared ownership properties for a certain amount of time?
|
Conway563
Member
Registered: 7th Jun 06
Location: Yate, Bristol
User status: Offline
|
You'd get a shared ownership mortgage for the 33% share of the flat. Generally speaking you need about 10% the share as per a normal mortgage
You pay your mortgage as nomal and a rent for the other share
Depends on the terms of the contract but most allow you to buy a bigger share of the property (usually 5 or 10% at a time) as you go along
When you come to sell it again it depends on the contract, you can either sell just your share or the whole property and you just keep the value of your share
When we were looking at properties the shared ownership was for 5 years, at the end of that you could either buy the remaining share or sell. Again though each contract is different
Not sure if any of that makes sense 
|
Whittie
Member
Registered: 11th Aug 06
Location: North Wales Drives: BMW, Corsa & Fiat
User status: Offline
|
Yeah, kind of made some sense to me thanks Joe
Think I need to have a sit down when i've got some spare time with an estate agent and let him explain it!
|
Fro
Member
Registered: 20th Jun 06
Location: Rainham, Essex Drives: A3 2.0TDi Sport
User status: Offline
|
As Joe has said basically. But be careful who you do it with as you can lose money when selling depending on the t & c's of the people you are getting it with.
Been looking into them for a bit, but the rent you're paying for the share you dont own is effectively dead money so thinking about knocking that on the head and just using the money i have at the moment to buy and sell shiz to make more so i can get the house without needing help.
Trying to bunk up with someone is also a good shout, but you'd have to make pretty darn sure you could live with them
|
Conway563
Member
Registered: 7th Jun 06
Location: Yate, Bristol
User status: Offline
|
quote:
Originally posted by Whittie
Yeah, kind of made some sense to me thanks Joe
Think I need to have a sit down when i've got some spare time with an estate agent and let him explain it!
I've found most estate agents haven't got a clue about it TBH
I found we got much better information from an IFA
|
Whittie
Member
Registered: 11th Aug 06
Location: North Wales Drives: BMW, Corsa & Fiat
User status: Offline
|
I just asked my brother if he knew anything about it, and he said he owns a couple of houses done on a share scheme, going to ring me after work to talk about it. Result
|
A2H GO
Member
Registered: 14th Sep 04
Location: Stoke
User status: Offline
|
Im on shared ownership mate, i'll explain when i get in after the gym but some of the stuff said in here already isnt entirely true. 
[Edited on 11-11-2010 by A2H GO]
|
A2H GO
Member
Registered: 14th Sep 04
Location: Stoke
User status: Offline
|
quote:
Originally posted by Conway563
You'd get a shared ownership mortgage for the 33% share of the flat. Generally speaking you need about 10% the share as per a normal mortgage
You pay your mortgage as nomal and a rent for the other share
Depends on the terms of the contract but most allow you to buy a bigger share of the property (usually 5 or 10% at a time) as you go along
When you come to sell it again it depends on the contract, you can either sell just your share or the whole property and you just keep the value of your share
When we were looking at properties the shared ownership was for 5 years, at the end of that you could either buy the remaining share or sell. Again though each contract is different
Not sure if any of that makes sense
Your thinking of shared equity mate, not shared ownership, or your mixing the two up.
|
AndyKent
Member
Registered: 3rd Sep 05
User status: Offline
|
Personally, I think these schemes are a MASSIVE con.
The idea of selling you part of a property is because you can't afford the whole thing. The true market adjustment is to reduce the price, but instead they manage to retain it at the higher level.
Robbing bastard schemes 
|
A2H GO
Member
Registered: 14th Sep 04
Location: Stoke
User status: Offline
|
Shared ownership - You buy and mortgage a share of the property, usually in 25% increments, so you can buy 25, 50 or 75% and then rent the rest off the housing association. The combined rent + mortgage is less than a full mortgage and as you are buying less you don't need as much deposit. Only certain banks do mortgages on this scheme. You can then at any time buy the remaining share of the property. In my particular agreement there is no limit, so in theory you could go from 25% to owning 100% of the property in one go, providing you have the additional deposit. If you decide to sell, the house is revalued and you get your share of that. ie. House valued at £100k, you own 50% so you get £50k. If the house has gone up in value £5k since you bought it and you own 50% you get £2500 of this.
Shared Equity - You mortgage 70% of the property and the other 30% is covered as an interest free loan from the housing association/builder for 5 years. After the 5 years providing you want to remain in the property you have to buy back the other 30% either by means of a re mortgage, savings etc.
|
A2H GO
Member
Registered: 14th Sep 04
Location: Stoke
User status: Offline
|
quote:
Originally posted by AndyKent
Personally, I think these schemes are a MASSIVE con.
The idea of selling you part of a property is because you can't afford the whole thing. The true market adjustment is to reduce the price, but instead they manage to retain it at the higher level.
Robbing bastard schemes
Thats true, the same as renting, you rent because you cant afford to mortgage.
The schemes do artificially keep house prices high but as they have been around for some time and will be around for sometime to come, this will always be the case whether you opt for the scheme or not.
|
AndyKent
Member
Registered: 3rd Sep 05
User status: Offline
|
Its a fair point, and if you must get on the ladder it is a route to take.
Just gets me that they advertise the idea as 'doing you a favour', where they're actually artificially propping up the value of property.
|
Xs
Member
Registered: 12th Apr 02
Location: Lanarkshire
User status: Offline
|
I wrote my masters dissertation on this am mortgages, to sum things up without typing too much of a Paul J style essay. Shared equity in the UK is on the increase and seen by some as a useful way of getting on to the property ladder.
With shared equity, the buyer does not own the property in conjunction with any other party (unlike shared ownership) but instead takes out more than one loan for the property. A mortgage (usually from a bank or building society) and an ‘equity loan’ (often from the developer). The purchaser is the only person on the deeds. There is no co-owner. However, at a set future date or when the property is sold, the purchaser has to repay the loans and a proportion of any increase in equity of the property to the party making the ‘equity loan’.
Such schemes may help buyers to enter the market as well as assisting developers with the sale of properties during the current economic climate and are being used as a tool to boost sales and are seen by many economists as a "quick fix" (especially for first-time buyers. The importance and significance of the first-time buyers to the property market is huge and efforts had to be made to bring them back into the market) but in the long term they are not a good option.
|
Cavey
Member
Registered: 11th Nov 02
Location: Derby
User status: Offline
|
quote:
Originally posted by A2H GO
Shared Equity - You mortgage 70% of the property and the other 30% is covered as an interest free loan from the housing association/builder for 5 years. After the 5 years providing you want to remain in the property you have to buy back the other 30% either by means of a re mortgage, savings etc.
That's what we've done.
But we don't HAVE to buy back after the 5 years, just pay back at 1.5%
Obviously if we can afford to we will be looking to re-mortgage to get 100% but it's not essential to stay in the house
We wanted to get on the ladder, and loved the house, this was the only way we could do it, and I say ladder, we've gone most of the way up the ladder, and will hopefully be staying here for 20+ years, went for a higher valued/larger house as we're planning family etc, and also it's a nice estate as well 
|
dannymccann
Member
Registered: 9th Aug 06
Location: Doddington, Lincolnshire
User status: Offline
|
I am also on shared equity, thanks for defining the terms ash, as I didnt actually know that!
Our house was valued at £137k, the developer gave us a 20% interest free loan for 10 years and we had 5% deposit to get a 75% LTV mortgage (4.89% fixed for 2 years on 104ish). We will max our ISAs, or as much as we can because we are only on £30k combined incomes every year and then pay off the interest free bit at a) when we can and house prices are still low (they take the average of 3 valuation at the time of repayment to figure what 20% is in today's money) or b) right at the end of the 10 years
|
Ben G
Member
Registered: 12th Jan 07
Location: Essex
User status: Offline
|
it's good for getting on the property ladder and being independent but i don't think i could live with a half and half style mortgage/rent.
being able to buy the rest off the builder sounds good, but you need to read the contract properly to make sure you're not getting ripped off.
after all, they are out to make a profit.
|
A2H GO
Member
Registered: 14th Sep 04
Location: Stoke
User status: Offline
|
You do have to be careful as some of the agreements can be dodgy but as long as you ask the right questions and have all bases covered it is a good way to get on the ladder. Not only that, get on at a good LTV meaning you can save yourself a lot of money in interest.
Half mortgage/rent isnt as much of a pain in the arse as you think, plus because the housing association still have an interest in your house they are quick to put stuff right. We have been in now for around 18 months yet they will still come and fix nail pops, wall cracks(with it being a new build), they've put us a new shower in, fully installed us an alarm, replaced a pump in the boiler, replaced outside lights and bulbs etc and they cover our buildings insurance. All money which can then go in savings to purchase the rest.
|
Rob_Quads
Member
Registered: 29th Mar 01
Location: southampton
User status: Offline
|
Always found these very interesting.
Would I be right in thinking that shared equity are always going to save you money purely for the fact you are getting an x% loan interest free for a number of years so instead of having to pay interest on it which is what you mostly pay at the start of a morgage?
|
dannymccann
Member
Registered: 9th Aug 06
Location: Doddington, Lincolnshire
User status: Offline
|
quote:
Originally posted by Rob_Quads
Always found these very interesting.
Would I be right in thinking that shared equity are always going to save you money purely for the fact you are getting an x% loan interest free for a number of years so instead of having to pay interest on it which is what you mostly pay at the start of a morgage?
Thats the way I looked at ours, whether its wrong or not I'm happy with mine. If we werent on the scheme we could have only afforded a house for £80k tops, which will get you a decent (but very old) midterrace but would have left no money for repairs / inevitable failures.
Whereas we have bought a place worth £138k with the same deposit, 3 bed 3 storey mid terrace new build which we could live in for many years, space enough for easy 2 kids (so technically could be a house for life)
|
AndyKent
Member
Registered: 3rd Sep 05
User status: Offline
|
quote:
Originally posted by Rob_Quads
Always found these very interesting.
Would I be right in thinking that shared equity are always going to save you money purely for the fact you are getting an x% loan interest free for a number of years so instead of having to pay interest on it which is what you mostly pay at the start of a morgage?
Not really, no.
You are paying rent in the meantime which isn't going towards your equity in the property.
Then you have to borrow the money for the remainder you need to buy out the secondary owner, meaning interest is added on at a later date.
In effect, you pay twice.
|
Cavey
Member
Registered: 11th Nov 02
Location: Derby
User status: Offline
|
quote:
Originally posted by AndyKent
quote:
Originally posted by Rob_Quads
Always found these very interesting.
Would I be right in thinking that shared equity are always going to save you money purely for the fact you are getting an x% loan interest free for a number of years so instead of having to pay interest on it which is what you mostly pay at the start of a morgage?
Not really, no.
You are paying rent in the meantime which isn't going towards your equity in the property.
Then you have to borrow the money for the remainder you need to buy out the secondary owner, meaning interest is added on at a later date.
In effect, you pay twice.
If Shared equity is the one we're on, then we don't pay any rent on the other half, the government/miller homes owns the 30% and we don't do anything with that till 5 years time, at which point we can either buy it off them, or pay back at 1.5% So for the first 5 years we only pay on £123k of our £190k house.
|
A2H GO
Member
Registered: 14th Sep 04
Location: Stoke
User status: Offline
|
quote:
Originally posted by AndyKent
quote:
Originally posted by Rob_Quads
Always found these very interesting.
Would I be right in thinking that shared equity are always going to save you money purely for the fact you are getting an x% loan interest free for a number of years so instead of having to pay interest on it which is what you mostly pay at the start of a morgage?
Not really, no.
You are paying rent in the meantime which isn't going towards your equity in the property.
Then you have to borrow the money for the remainder you need to buy out the secondary owner, meaning interest is added on at a later date.
In effect, you pay twice.
Your mixing it up with shared ownership. There is NO rent on shared equity, its an interest free loan. The only downside is if the property goes up in value, the loan costs you more to pay back.
ie. If the loan covers 25% of a £100k property. After 5 years the propertys worth £110k, the loan costs you an extra £2.5k to pay back. Then again it could go down in price.
[Edited on 15-11-2010 by A2H GO]
|
AndyKent
Member
Registered: 3rd Sep 05
User status: Offline
|
Oops, my mistake. Still, in a regular market, the price should go up.
Imagine in an expensive area it could end up you can't afford to buy out the rest
|
deano87
Member
Registered: 21st Oct 06
Location: Bedfordshire Drives: Ford Fiesta
User status: Offline
|
I also wanted to know about this. And Shared Equity sounds like a right plan - I guess you can pay into the loan if you want over the 5 years too?!
Good post
|
Rob_Quads
Member
Registered: 29th Mar 01
Location: southampton
User status: Offline
|
quote:
Originally posted by A2H GO
he only downside is if the property goes up in value, the loan costs you more to pay back.
ie. If the loan covers 25% of a £100k property. After 5 years the propertys worth £110k, the loan costs you an extra £2.5k to pay back. Then again it could go down in price.
[Edited on 15-11-2010 by A2H GO]
Ah I see. Yeah so its swings and roundabout then. Would be a spreadsheet and a half to work out the break evens if prices went up etc. Extra Interest Paymented on mortgage vs Extra payment required to buy house after X year.
|
