Afforable House

etnies

Hi all

I'm hoping to get peoples opinion on this, I've seen an apartment here
http://www.georgewimpey.co.uk/newhomes/Manchester/RegencyCourt/
for around 30% of the full price its £74,695 where the full price would be £112,995

This is part of an affordable housing scheme, where its the case you get it 30% cheaper than the full price and when you come to sell, you sell 30% cheaper than the full price. its not shared ownership, I would own 100% and its not homebuy scheme where you have to pay that 30% after so many years.

Currently I rent an apartment in Chester city center, and am paying about £325 (I flatshare so the full cost of flat is 650) a month or £3900 a year not too far from this flat.

I can afford 10% deposit on the flat so that would make a mortgage of 67k ish, they say to get this deal you have go through xact mortgages who in turn get a deal from the halifax which they said is 7.5% fixed for 5 years so would work out at £500 a month which I can afford no problem.

here are my thoughts correct or incorrectly...

• I know house prices are dropping, but because of this little or no new houses will be built so getting a deal like this will become very difficult once prices increase again
• Chester city centre will hopefully keep its value as its a desirable place to live
• currently I'm losing almost 4000 a year in rent, at least this way i get to pay into something even if in the immediate future it goes down, and are they likely to down more than 4k a year?...
• Once prices start to rise again, there possibly wont be schemes like this so I'd need a bigger deposit and have to pay more mortgage
• Even at the full price of 115k its cheap for Chester looking at prices on rightmove
• this mortgage of 500 would be cheaper than renting most apartments in Chester which tend to be around £600 upwards

The house is built and ready to move in and is mine if I want it, so does anyone have opinion on this?

thanks

Thrugelmir

Yes you would own 100% of the property. However Wimpey hold a charge over 25% of the the value of the property. This appears to be an interest free loan. However this loan has to be repaid by the the end of 10 years. At the time of repayment this is based on the market value of the property.

So if they lent you £30,000 for example and the value of the property increased by 50% over 10 years. You would owe them £45,000 which if you wanted to stay in the property would need to be funded by a further mortgage.

Personally I would sit tight for the moment. Schemes like this appear attractive but have a sting in the tail. Nothings for free as they say.

Premier_2

Why not believe you are getting it for about 90% off its full price of £1m?

If the highest someone is prepared to pay is £74,695, then £74,965 is all its worth.

I'd be careful of agreeing to 7.5% mortgage rate. Current BoE rate is only 1.5% and may drop further.
I'm not suggesting you may get a new mortgage for 1.5% , but I think you can get one for less than 7.5%
4-5% is typical SVR at present, or if youi really want a 5 yr fixed deal, then 5-6% would be typical

etnies

Thrugelmir wrote: »

Yes you would own 100% of the property. However Wimpey hold a charge over 25% of the the value of the property. This appears to be an interest free loan. .

thanks for the reply, its not the same as homebuy scheme where you have to repay the 30% loan, all this is, is you get the house cheaper, but have to sell it cheaper. I think its a scheme by chester city council as they have to offer so many affordable houses per development and this allows them to share in future profits.

Premier_2

etnies wrote: »

...this morgage of 500 would be cheaper than renting most apartments in chester which tend to be around £600 upwards
The house is built and ready to move in and is mine if I want it, so does anyone have opinion on this?

thanks

Oh dear, if rent only had to pay for mortgage repayments, this BTL lark would be so easy as some have found to their cost.

As a homeoner you are responsible for so much more than just paying the mortgage - things which renters can hold their LL liable for. Have a read of this forum and see some examples

etnies

Premier wrote: »

Why not believe you are getting it for about 90% off its full price of £1m?

If the highest someone is prepared to pay is £74,695, then £74,965 is all its worth.

because they are selling the same apartment at full price as well, this is part of a council scheme to allow so many affordable houses you can see this on the link i posted.

etnies

Premier wrote: »

I'd be careful of agreeing to 7.5% mortgage rate. Current BoE rate is only 1.5% and may drop further.
I'm not suggesting you may get a new mortgage for 1.5% , but I think you can get one for less than 7.5%
4-5% is typical SVR at present, or if youi really want a 5 yr fixed deal, then 5-6% would be typical

I agree with this and its one of the things I dont like, as to get the affordable house deal they insist on using "xact morgages" who then get a deal through the halifax. althouth this 7.5% was told to me last week, when I checked on the halifax website there first time buyer rates where 7 - 7.5, checking today its in the 6's so maybe the percentage offered by xact would be cheaper now...

Thrugelmir

I think its a scheme by chester city council as they have to offer so many affordable houses per development and this allows them to share in future profits.

Ah. This changes the picture. Would be useful to know the details on this.

Agree with other poster that 7.5% is a high interest rate.

etnies

Thrugelmir wrote: »

Ah. This changes the picture. Would be useful to know the details on this.

on this page

http://www.chester.gov.uk/council_services/housing/affordable_housing.aspx

they say:

There are 3 types of affordable housing:

• Social renting- main Housing Associations are Chester and District Housing Trust, Muir Group and Arena Housing.
• Shared Ownership - applicants buy a percentage of the property with a mortgage and pay rent on the rest. This will always be cheaper than a mortgage for the full amount. For social renting and shared ownership applicants need to be on ALL of the RSL's lists. There is a leaflet available from the City Council with all Housing Association names and addresses. Selection procedures will favour low / medium income earners with a connection to the local area.
• Low cost discount for sale - applicants buy a property outright at a discount off the market value. The discount will apply to re-sales of the property as well. Schemes will vary as they are developed.

the apartment I mention refers to the third bullet point

Thrugelmir

etnies wrote: »

on this page

http://www.chester.gov.uk/council_services/housing/affordable_housing.aspx

they say:

There are 3 types of affordable housing:

• Social renting- main Housing Associations are Chester and District Housing Trust, Muir Group and Arena Housing.
• Shared Ownership - applicants buy a percentage of the property with a mortgage and pay rent on the rest. This will always be cheaper than a mortgage for the full amount. For social renting and shared ownership applicants need to be on ALL of the RSL's lists. There is a leaflet available from the City Council with all Housing Association names and addresses. Selection procedures will favour low / medium income earners with a connection to the local area.
• Low cost discount for sale - applicants buy a property outright at a discount off the market value. The discount will apply to re-sales of the property as well. Schemes will vary as they are developed.

the apartment I mention refers to the third bullet point

Suggest you obtain details of scheme. In principle it sounds similar to Wimpey's offer. Except it's a higher %. There may well be a time limit on the period of time the loan is for. As the scheme is there to assist people in buying not provide long term finance.

etnies

Thrugelmir wrote: »

Suggest you obtain details of scheme. In principle it sounds similar to Wimpey's offer. Except it's a higher %. There may well be a time limit on the period of time the loan is for. As the scheme is there to assist people in buying not provide long term finance.

Its not a loan, as pointed out before. You get the house at a reduced rate, and when you sell you sell it at the cheaper price... this 30% doesn't have to be paid by myself at any point.

Wimpeys offer is they loan you money, this isn't the same scheme...