Deferred Equity. To Buy Or Not To Buy

dylan8

I bought a house 12 months ago. At the time it was valued at 136000. I bought 85% of it (115600), the builders own the other half. I do not pay rent on their 15%. Ive recently had it valued at 110000, meaning it would cost 16500 to buy the rest of the house , 5000 cheaper then last year but it would still put me into negative equity by 6500 having a mortgage of 116500(if i get an extended mortgage). Has anyone been in this situation? Whats the best thing to do in the current climate??

:eek:

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brit1234

Pay off as much of the main mortgage as you can quickly to prevent re mortgaging problems. At the very bottom of the crash when prices have been stagnating for a period on months then switch to paying off as much as the 15% as you can.

Good luck


I advise anyone considering the scheme to avoid it, it is just designed to keep prices high and traps ftb leading to a nightmare 10 years down the line or if you ever want to sell.

dylan8

Thanks for your advice. The scheme has been brilliant though. Im not paying any rent for the 15% and if id bought at the 100% price 12 mnts earlier it would have cost me 5000 more technically. Just wanted to know buy the rest now or wait for a further slump?

Incisor

dylan8 wrote: »

Thanks for your advice. The scheme has been brilliant though. Im not paying any rent for the 15% and if id bought at the 100% price 12 mnts earlier it would have cost me 5000 more technically. Just wanted to know buy the rest now or wait for a further slump?

So far it has been brilliant, but wait till you try to resell or remortgage.

Incisor

brit1234 wrote: »

Pay off as much of the main mortgage as you can quickly to prevent re mortgaging problems. At the very bottom of the crash when prices have been stagnating for a period on months then switch to paying off as much as the 15% as you can.

Interesting. Although I would normally seek to pay off a mortgage, in this case, I think I would start saving hard into a separate pot and make the choice of buying out the 15% or paying off some mortgage later, depending on whether I had to remortgage or whether I felt things had bottomed. If the 15% has been bought out, then that will count towards the equity for remortgaging.

I advise anyone considering the scheme to avoid it, it is just designed to keep prices high and traps ftb leading to a nightmare 10 years down the line or if you ever want to sell.

100% agree.

dylan8

I wouldnt advise anyone against this. Its not like a shared equity where you have to pay rent. Ive spoke to the bank and will have no problems remortgaging. Ive had a free £26000 loan for a year technically.

dylan8

Its a good scheme. Im not paying rent like some on their shared equity deals. Ive spoken to the bank and will have no probs remortgaging.

brit1234

dylan8 wrote: »

Its a good scheme. Im not paying rent like some on their shared equity deals. Ive spoken to the bank and will have no probs remortgaging.

For many of us it is a very bad scheme for one principle reason. You are buying an extremely overvalued property and all prices are crashing around you. It is a FTB trap.

Incisor

dylan8 wrote: »

Its a good scheme. Im not paying rent like some on their shared equity deals. Ive spoken to the bank and will have no probs remortgaging.

You bought 12 months ago. I assume the bank told you this when you bought. I doubt you would get the same answer now.

poppysarah

Another bizarre idea - does it not strike the victims as a scam?
I spose when house prices have gone up for such a long time they just can't see what might happen.