newbuild homebuy....help needed please

hidchere

am looking to get onto the property ladder by buying a part buy part rent newbuild property, does anyone know if theres only certain lenders out there for me? if so any advice? thanks loads

Bargain_Rzl

Above spam post reported :rolleyes:

Hi, hidchere. In answer to your first question, yes, the choice of lenders is limited with shared ownership. I am with Nationwide and there are three or four other major lenders who deal with shared ownership mortgages. However I understand they are asking for large deposits these days.

In answer to your second question the best advice I can give is please don't rush into anything in the current market. Shared ownership is not ideal for many people, and many schemes are still overpriced. If I needed to buy a property today, I probably wouldn't be looking at any newbuild, never mind a shared ownership one. Have you considered renting, saving, and buying outright once the market has fallen further?

Do a search on the House Buying, Renting and Selling board for shared ownership and you will find loads of advice from people like me who have bought shared ownership homes themselves. Do always bear in mind that people have done this at different times and what might have been a good idea a couple of years ago may be a very bad idea now.

Edited to say: I notice from one of your other threads that it's shared equity rather than standard shared ownership - do a search for that too

hidchere

no that was our first choice, we looked into it and found we couldnt afford it....this one is a goverment scheme... we can afford it, but dont know where to look for a lender with 95%ltv on a shared ownership.....aparently they are out there....but i cant find it.

brit1234

Shared equity or shared ownership are equally as bad as each other, I would stay well clear. As the above poster said look on the other board, hopefully there will be enough reasons there to put you right off.

I suggest you save and enjoy the massive price falls.

Lanz81

personally I prefer the shared equity rather than the shared ownership because of the rent as i had a friend who did this a few years ago and they put up the rent every year and the rent is dead end money as it wont be coming off the part that they own.

Ive just done a shared equity with a new build, most new builds are offering them at the moment and i am happy with what i am doing because i do not need a deposit.

This is my own opinion

Bargain_Rzl

Lanz81 wrote: »

personally I prefer the shared equity rather than the shared ownership because of the rent as i had a friend who did this a few years ago and they put up the rent every year and the rent is dead end money as it wont be coming off the part that they own.

Re: the rent, a good shared ownership lease will specify how much they can increase the rent by, and how often.

Re: rent payments being "dead end money" - my shared ownership property, bought 2 years ago, costs about £230 pcm in rent, while a mortgage for that value would be costing me more than double that (on top of the mortgage I have on the portion I do own). Rather than being mortgaged to the hilt I would far rather have the lower cost, reduced risk of negative equity, ability to pay my existing mortgage off sooner and freedom to plan for ownership of an increased share in future once my original mortgage is almost or completely cleared.

HOWEVER as I have already said, I did buy my place 2 years ago, and the market has changed beyond recognition since then. I'd suggest that going into shared ownership at this point, especially with a 95% mortgage (if you can get one that is) would only be worth it if the property was realistically valued in the current market, and the total monthly outlay was SUBSTANTIALLY cheaper than renting and comfortably within your means. Come to think of it, I wouldn't have bought my shared ownership flat even two years ago if it hadn't met those criteria.

As I say - read my posts (and others) on previous threads.

mailmannz

Bargain,

How are you protected from negative equity with shared ownership?

As you pay your rent, does that reduce the amount owned by the housing assocition or home buy agency?

Perhaps the biggest problem with shared ownership is the lack of real funding for these programs. We looked at homebuy, but were told that there was no money left and none likely to be available until well in to 2009.

Kinda defeats the entire point doesnt it?

Regards

Mailman

Bargain_Rzl

You're not protected in any concrete sense. I simply mean that by spreading your liability, as it were, between buying and renting, you limit your exposure. When I bought my SO flat (moved in 2 years ago today!) I could have just about afforded to buy outright, with a mortgage of 5x my salary - and I'm sure I could have found a lender to take me on at the time, too - but it would have been a serious financial stretch, and in hindsight I am still certain I did the right thing. If I'd bought a £145k flat with a £14.5k deposit and a mortgage of 5x what my salary was at the time, and prices dropped 20%, I'd now be £14.5k in negative equity. In fact, I bought a 40% share, and if it turned out my flat were now worth 20% less than what I paid for it, I'd only be in neg equity to the tune of 40% of what my exposure would have been if I owned 100%.

As it is, the fact that I bought a 40% share (which put my monthly outgoings well within my means) has meant I have been able to pay off a large chunk of my mortgage already, and am not in negative equity at all...

mailmannz

So what happens with the other 60% you dont own once you pay off your mortgage? Will you have to remortgage to buy the other part off the home buy agency?

When you pay your rent, does that reduce the level owned by the home buy agency?

I still dont see how you are protected from negative equity. If your flat has lost 20% of its value, doesnt that now mean your initial 40% is now only worth 20%?

Im just not seeing the benefit of shared ownership when you could have bought your property outright in the first place.

Actually...Im just going to go off on a tangent here

If you have bought your flat to be lived in, then whats the real problem with short term negative equity? I have no synpathy for people who bought "investment" property with the sole aim of creating as much short term profit as possible before selling off at massively inflated price to the next numpty (hence the false property bubble that everyone is pretty sure is about to pop).

If you have bought your house to be your home, then you should be looking at the long term picture, not the short term (ie. next couple years).

Mailman

Bargain_Rzl

mailmannz wrote: »

So what happens with the other 60% you dont own once you pay off your mortgage? Will you have to remortgage to buy the other part off the home buy agency?

If I choose to do so, yes. Or I could continue to rent it, and invest my disposable income elsewhere, possibly with a view to buying outright at a later stage.

When you pay your rent, does that reduce the level owned by the home buy agency?

No.

I still dont see how you are protected from negative equity. If your flat has lost 20% of its value, doesnt that now mean your initial 40% is now only worth 20%?

No, my only liability is for the portion I own. In your example, I'd only have lost 20% OF 40%, not 20% of 100%. The risk associated with the remaining 60% is entirely down to the housing association.

Im just not seeing the benefit of shared ownership when you could have bought your property outright in the first place.

I could only have done so by a considerable financial overstretch. If interest rates had risen and property values fallen before I came off my fixed rate, I'd really have been in deep doo-doo. That wasn't a risk I was prepared to take.

If you have bought your flat to be lived in, then whats the real problem with short term negative equity? I have no synpathy for people who bought "investment" property with the sole aim of creating as much short term profit as possible before selling off at massively inflated price to the next numpty (hence the false property bubble that everyone is pretty sure is about to pop).

I prefer to know I'm solvent! Also, negative equity affects ability to get new mortgage deals - something which would now be causing me a major financial headache if I had overstretched to buy outright.

If you have bought your house to be your home, then you should be looking at the long term picture, not the short term (ie. next couple years).

I am The long term plan is as I stated above (first paragraph of this message). But I'm of the view that creating a secure and stable position for myself involves looking at the short term as well.

mailmannz

Can you walk away from your property if you wanted to? What happens to the 60% you dont own? Can you sell your 40% to a someone else?

We looked at shared ownership BUT money for our area had run out...so we are now heading down the shared equity route.

Either way, without a substantial deposit we are rooted for properties in London. Like many others, shared ownership/equity is the only real way for us to get on to the property market.

Mailman