Are 75% schemes better than shared ownership?

thepeachyone

We have found a house we like in the location we want and we can afford it if we use the shared purchase scheme, whereby you pay for 75% to start with, pay no interest or rent on the remaining 25% then pay for the 25% at some time in the next 10 years. You own the whole of your property from the outset but have to either sell or buy the extra 25% in the next 10 years.

The other suitable homes we can afford tend to be the shared ownership schemes where a housing association owns 10-50% and you own the rest. You pay rent on the other portion.

I know lots of people feel negatively about shared ownership, but if you havent got the money to buy a decent 4 bedroomed house such as we need, we feel it is better than renting for another few years, given that the cheapest 4 bed to rent is £800 pcm.

So Im not asking if you like these schemes are not, Im asking if anyone knows which one of the two is the best.

ciano125

Unfortunately the only person who will "know" which option is right is you! Personally I wouldnt take the shared ownership option because it doesnt suit my circumstances, but my circumstances will be different to yours. If you're buying a new build (which I presume it is) then just offer 70% of the asking price anyway (if you can afford the 75% this should be ok for you), state your position, ie first time buyer and ready to go, and you might be surprised.

aliwali

I was looking at this idea as well. We have seen a really nice 4 bedroom house that we like. It is a new build and is £249,000 so at 75% we would pay £186,750, which we could afford fairly easily (Although I would hope to knock a fair bit off that). The thing that worries me about these schemes is that you have to them find £70,000 in 10 years to own the rest. That is the bit I am not so sure about.

So I guess my advice would be, get some money knocked off and have a clear idea at the outset how you are going to find the other 25% in the next 10 years. I would definately prefer this to a traditional shared ownership scheme.

thepeachyone

Well, on the 75% shared equity, whilst we were viewing we managed to talk him down 10,000, but lets be honest, he might have dropped that anyway and not updated the details. What I would try for next is extras included eg carpets and whirlpool bath!

I am also anxious about raising the other 25% in the next 10 years. I suppose you could take out a remortgage in 9 and a half years time. If house prices drop the developer gives up the first 10% - not quite sure how this works though. The worst thing for us is the fact that we arent particularly young: aged 49 and 50 so really we would be looking at a 15 yr mortgage.

I still cant decide if this is better than just buying 75% and a housing association keeping 25% then paying rent on that. There is no compulsion to buy the extra, but you can do staircasing.