Own Home Scheme Pros and Cons

wasteNot_4

Does anyone know if it's possible to 'Staircase' in an OwnHome scheme - By paying off the mortgage and equity loan before selling - Would this reduce the share of equity payable to OwnHome?

pandamonia

biggest problem with this scheme is the crap mortgages you are tied to and the huge charges they come with!

wasteNot_4

I wonder if you could do it without the mortgage though - Suppose you had a decent deposit, say £50,000, and you only needed the 20-40% shared equity loan. There are homes available in my area for that kind of figure. Would they do that? Or am I dreaming... Have to ask them I guess.

If they did and you paid it all back before selling, would they still be entitled to a 20-40% share? This part is a littlte unclear on their website.

On the other hand if you had a £50,000 deposit maybe you wouldn't be eligible anyway.

pandamonia

wasteNot wrote: »

I wonder if you could do it without the mortgage though - Suppose you had a decent deposit, say £50,000, and you only needed the 20-40% shared equity loan. There are homes available in my area for that kind of figure. Would they do that? Or am I dreaming... Have to ask them I guess.

If they did and you paid it all back before selling, would they still be entitled to a 20-40% share? This part is a littlte unclear on their website.

On the other hand if you had a £50,000 deposit maybe you wouldn't be eligible anyway.

yes ur dreaming and no they wont lend u anything with 50k hanging around

sarastark86

wasteNot wrote: »

I wonder if you could do it without the mortgage though - Suppose you had a decent deposit, say £50,000, and you only needed the 20-40% shared equity loan. There are homes available in my area for that kind of figure. Would they do that? Or am I dreaming... Have to ask them I guess.

If you have a deposit of that size, why would they lend you the money interest free?? it's meant to help people who can't afford to buy their own homes, not those who just don't fancy paying interest on their loans. As if!!

bigsmoke

Hi there everyone

i'm just starting out looking at the ownhome scheme (with a view to applying for next year's funding allocation in april) but can see, from the comment above, that having a deposit might make me ineligible. is anyone able to tell me how they factor your deposit into their calculations - the website doesn't mention a deposit, just your earnings.

i appreciate that having a deposit puts me in a better position than someone without one, but even so i am a single first time buyer and so, even with the deposit, still have no chance of affording a propery in london. am i likely to be disqualified because of the deposit?

thanks very mcuh - i know that only ownhome can give me a definitive answer, but it would be nice to have a rough idea without having to wait for 6 weeks for them to tell me!

BS

sarastark86

hi big smoke

you can have a deposit. they won't disqualify you for having one. it will just influence how much you borrow in the equity loan. basically they will expect you to take, as a minimum amount, 3x joint income or 3.5x single income, as your mortgage. you also need to borrow minimum 20% as an equity loan and maximum 40% to qualify for the scheme. so let's say, you earn 20k, you have 10k deposit and the house you want is 100k. you get a mortgage for 70k (3.5x your income), use your deposit and borrow the remaining 20k as an equity loan for 20% of the purchase price. If you decided not to use the deposit you would take out an equity loan for 30%.

the reason the previous poster would be ineligible was because he was suggesting buying a house using a deposit and an equity loan, with no mortgage. they won't let you take the p1ss e.g. his suggestion or by taking out a mortgage for 2x income. they expect you to make a reasonable contribution to the cost of the house and then they make up the shortfall.

hope this makes sense. i'm not an expert but i think that's how it works!

wasteNot_4

sarastark86 wrote: »

If you have a deposit of that size, why would they lend you the money interest free?? it's meant to help people who can't afford to buy their own homes, not those who just don't fancy paying interest on their loans. As if!!

Ok yes I apologise for being greedy.

But what about the equity question? Suppose with your monthly payments you pay off the mortgage and some of the lets say 25% equity loan, would Ownhome still be entitled to 25% of equity, even if you had reduced their share to say, 20%?

With MyChoice Homebuy you can do staircasing and as far as I can tell this reduces the share of equity repayable upon sale. (Right?)

I realise this may not be of any real importance for those simply wishing to own their own home but it will affect one's ability to move up the ladder once finally on it, so it may be a factor in deciding to go for the scheme.

sarastark86

as far as i am aware there is no opportunity to staircase with Ownhome. the mortgage is completely separate from the equity loan. You either pay back the percentage of equity that you borrowed when you sell including any increase in value, or if you don't sell you have to pay it back at the end of 25 years (after 5 years you would also be paying interest on the loan).

having said that, i haven't actually done it, and it does say somewhere on the website that you would need to discuss your plan for paying back the equity loan when you take it out (naturally). so maybe they do offer staircasing. but it is my understanding that you would have to put money aside to pay back all the loan in one go at the end of the 25 years, assuming you don't sell.

wasteNot_4

Yes that would make sense, in which case if and when you want to sell, you might find that you have to move down the ladder before you can move up, since you will only have enough for a home worth 20-40% less than the one you're selling, not counting any adjustments to the mortgage. Can anyone see a way around this situation that I'm missing?