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Shared ownership/equity is a scam.

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Comments

  • Cubbington
    Cubbington Posts: 38 Forumite
    No-one is bragging! At no point has anyone in this thread said shared equity/ownership is all singing all dancing greatness! All that's been said is that it does work for some people but there are other options available.

    Maybe if you stopped to read for a minute rather than trample over any comments trying to give opinions you might have seen that.
  • kingstreet
    kingstreet Posts: 38,686
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    It may not be advisable.

    It may not be sensible.

    It may be best avoided.

    It may have inherent risks.

    It may result in negative equity.

    It may artificially prop up the housing market.

    It is not fraud. It is not a swindle. It is not a trick. It is not a scam.

    I don't particularly like it, but I like ridiculous over-reaction even less and find myself becoming a "supporter," simply to oppose those in opposition.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • I'm not bragging I'm only presenting an alternative to the all too often negative viewpoint. SE has it's flaws but can benefit some people. Don't set out to purchase through these schemes, your first option should always be to try to buy without their help.
    Negative equity isn't exclusive to SE properties - any property can suffer as a result of a downturn and any homeowner can struggle to remortgage as a result.
    Loan rate of interest is RPI plus 1%.I have been paying this fee since the start, there was no interest free period. I plan to put the money I currently spend overpaying my mortgage towards paying the loan should RPI increase drastically. If inflation rates return to the levels of the early 80s I would have to make cut backs elsewhere but wouldn't everybody? I would still be able to afford to pay my mortgage and the loan rate though.

    I wouldn't have gotten involved in the scheme in the first place if I wasn't fully aware of its potential pitfalls.
    I would hope that people looking into these schemes would make sure they understood the implications fully before going ahead with it. Each scheme is different so I can only refer to my scheme which I feel is one of the better ones. So I would advise people to do their research, look at ALL the schemes available in their area, seek professional advice and don't overstrech their budget-. Some are better than others. They shouldn't all be tarnished with the same brush.
  • leveller2911
    leveller2911 Posts: 8,061 Forumite
    edited 16 April 2011 at 6:42PM
    They shouldn't all be tarnished with the same brush.


    I think we could all agree that current house prices are way out of the reach of the vast majority of FTB ers. The real problem still exists and that is HPI and until Government policy stops tinkering with implementing such schemes which are nothing more than a fudge we will not see a solution to the problem...

    TBH they should be tarred with the same brush because they are all there with the intent to keep house prices stable, which in itself is the problem
  • brit1234
    brit1234 Posts: 5,385 Forumite
    images?q=tbn:ANd9GcRe-HiJGlq0a6yw_Fi5IRgg4RinvwvjQn6KKIGpyLJZiMOvltEp

    Couple’s Bellway property dream now a nightmare


    by Claire Miller, South Wales Echo
    Mar 24 2011


    A COUPLE who appeared in adverts selling the property dream have found themselves in the middle of a housing nightmare.

    When Samantha Hyde, 33, and Craig Smith, 34, bought a one-bedroom flat in Cardiff Bay’s Prospect Place in 2004, they were used in advertising features for property developers Bellway, selling its shared equity Open Door Scheme as a perfect opportunity to get on the property ladder.

    Now they say they are stuck with a property they cannot afford to sell.

    Samantha, who runs her own business, said their problems started when her partner was made redundant in the autumn.

    She said: “With the recession I was finding it hard to make ends meet. We were getting into real financial trouble because he wasn’t working.

    “We decided let’s sell up, let’s cut our losses, move somewhere else.”

    When the couple bought the new-build flat in Kilcredaun House, they paid £109,000 for 75%, with the remaining 25%, at the time £36,000, due when they came to sell.

    They accepted an offer of £98,000 but the sale has not been able to go through as both the mortgage company and Bellway are demanding they pay them from the proceeds, which will not cover the £94,000 mortgage and the £17,000 that Bellway want.

    Samantha said the couple, who are now living with friends in Somerset, are stuck and facing repossession because the mortgage company expects to be paid off in full first, they do not have the extra money to pay Bellway a lump sum and the company will not accept an offer lower than £17,000.

    She said: “We feel very misled and because of them we’re not going to be able to purchase another property"

    “If we get repossessed they won’t get any more and it will bring down the price of the other flats because they’ll sell it cheap.”

    A spokesman for Bellway said the couple had agreed when they bought the flat that they would pay back the outstanding 25% when they sold.

    He said: “We are sympathetic to her, we have tried to suggest other arrangements.

    Property values have fallen, we would be taking a smaller amount. We’ve even suggested a lower figure, she won’t even accept that.”
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • HappyMJ
    HappyMJ Posts: 21,115
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    edited 16 April 2011 at 7:03PM
    LOL. So they bought a property valued at £145,000 and have sold it for £98,000 and lost £47,000....

    But no they had shared ownership instead of being down £47,000 they have been granted a discount on the final repayment from £36,000 to £17,000 so the losses are reduced to only £12,000 after paying the mortgage and the final repayment...

    I'd say shared ownership is a fantastic idea. In this case instead of being bankrupted they could borrow £12,000 unsecured and their credit file will be safe.

    And edit to add: they only have £94,000 outstanding on this mortgage. At an interest rate of 4% the mortgage repayment would have only been £315 per month if they declared they were in financial difficulty and renegotiated an interest only reprieve on the mortgage. If they can't afford that with two adults working how can they afford rent elsewhere....Yes, he lost his job so if he claimed benefit the interest would have been paid on the mortgage thereby costing them nothing to stay.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Graham_Devon
    Graham_Devon Posts: 58,560
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    PLEASE.

    Just one thing. Can all those writing shared ownership off as a scam, learn the difference between shared ownership and shared equity.

    Lambasting shared ownership based on shared equity is just sloppy practice. I realise the venom some have against such schemes, and admit there are flaws myself, depending on the scheme, the type of house, etc. However, there are many different schemes, with many different policies and conditions. Shared equity is NOT shared ownership. Neither are they scams. People DO need to know what they are entering into though.
  • kingstreet
    kingstreet Posts: 38,686
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    brit1234 wrote: »
    their problems started when her partner was made redundant in the autumn.

    She said: “With the recession I was finding it hard to make ends meet. We were getting into real financial trouble because he wasn’t working.
    Another "unforeseen" event which no-one could have taken action to prevent? Anyone buying a property who loses their job could have been the subject of this article.

    Unemployment cover?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • kingstreet
    kingstreet Posts: 38,686
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    People DO need to know what they are entering into though.
    Isn't that applicable to every financial transaction and to home ownership in general?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • brit1234
    brit1234 Posts: 5,385 Forumite
    PLEASE.

    Just one thing. Can all those writing shared ownership off as a scam, learn the difference between shared ownership and shared equity.

    Lambasting shared ownership based on shared equity is just sloppy practice.

    This thread is shared ownership/equity is a scam. It includes both schemes and refers them as both scams.

    I believe they are both scams as their effect is to artifically prop up house prices much like the US sub prime, option arm and alt A mortgages. Its all the same scam to make money for the builders and the bankers at the buyers expense.

    Yes I realise there is a clear difference between shared ownership and shared equity, however the media in most of the articles I have posted have also bounded both terms in the wrong incidents.

    However both are still scams to get people to over pay for housing. Without them property I am sure would be cheaper.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

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