75% ownership

alchemistkevin

Ah, good one

Don't listen to the doomsayers, they'll always be around.

Enjoy your home and be happy spend prudently and you should be alright after 10 years.

brit1234

I would strongly reconsider this. Developers are using the scheme to keep their prices high while other properties are falling fast in price. Far better to save and rent for a year.

Remember developrs are passing on big price cuts to investors for purchasing (some 50% off) why not first time buyers? With their increasing debts and huge preasure from the banks it is only a matter of time till the developers drop their overinflated property prices or go bust.

Below is a BBC video into the dangers of the scheme:

http://news.bbc.co.uk/1/hi/business/7613781.stm

Don't listen to the doomsayers, they'll always be around.

Please, a little common sense. Some of us are just offering advice to prevent people portentially making the biggest finacial mistake of their lives

Locoblade

As others have said, make sure you know what you'll owe in 10 years. If for example the house is £200k and the builder is paying £50k, in 10 years time will you owe them £50k or will you owe them 25% of what the house is worth at that time, ie it could be £75k owed if the house is worth £300k by that time. On the other foot, if the amount is fixed (at £50k in this example), if house prices really crash you could find yourself owing £50k on a house that's now only worth £180k, so you wouldnt have built up enough equity to remortgage and release the £50k you need to buy out the builder.

The other thing to watch out for is to make double sure the house you're buying is actually worth what you're paying. Its all very well them paying "25%" of a house they value at £200k, but if in fact its only worth £175k in the current climate, they're actually only lending you 12.5%, yet you'll be tied into paying them back the full 25% in 10 years time.

If after you've really studied all the possible pitfalls and you still think its the right deal for you, then go for it, but at least take heed of the advice given by others above and make sure you know what you're getting yourself into, and don't be blinded by fairly immaterial things like kitchen appliances being "thrown in", because you're invariably paying for them one way or another.

Lanz81

thanks for the advice guys but its too late for me as i will be moving in in the next few weeks

hidchere

how would you find out what the place is worth? its a new build... any ideas, we just got 10k off the asking price

Lanz81

try www.mouseprice.com

Lanz81

try www.mouseprice.com

yes we will have to pay back at market price in 10 years and i can only hope that we wont be at a loss but if i do not make a profit thats fine as i am buying a home not an investment

hidchere

cool thanks

minimike2

hidchere wrote: »

what were thinking of going ahead with is a 35 year interest and capital mortgage then after 10 years remortgaging it to pay the rest off.... is this viable? or am i assuming i can do this without actually knowing?

It depends on the price of the place.....

I used an 80/20 scheme to my advantage on my current house, not because I couldn't afford the mortgage for the full amount, but becuase I calculated it would save me £13,500 in interest as my scheme is interest free - I basically have part of the mortgage interest free is the way I see it - so you can use these schemes to your advantage.

However.....

You should be careful as you can become trapped in the property in the event the price falls, the reason for my opening comment. If you plan to live there for at least 10 years, then there is no real issue as long as you put a plan in place to pay the remaining money - i.e put it into savings (and actually EARN interest on it). If its a case of only being able to afford the house because of the equity share, then you should think long and hard about if you should maybe get something less expensive this time around and save hard for the future for your next move.

wymondham

hidchere wrote: »

its 100% yours... you pay the 25% after its sold whenever that is (b4 10 years) if you cant pay after 10 years you pay more interest in a 5 year buffer zone, then they force you to sell.

if you have to do this, then will you be able to afford to move in the future ?? lots of post about this type of thing ... my advice .. keep away..