Shared ownership: Good or bad?

456789

I have seen some posts on here saying that Shared Ownership is not a good thing

I didn't know what it was so I looked it up - http://www.housingcare.org/jargon-shared-ownership.aspx

Shared ownership properties are usually offered for sale by housing associations (not-for-profit organisation, see Glossary). You buy a share of a property, and pay rent to the housing association for the remainder. Your monthly outgoings will include repayments on any mortgage you have taken out, plus rent on the part of the property retained by the housing association. Later, as you can afford it, you may be be able to increase your share until you own the whole property.

So basically the scenario as I see it is you end with 2 elements the part you own and the part they own and over time your part increases

So either:
-part you own - you pay mortgage towards
-part they own - you pay rent towards

or

-part you own - paid in full using your savings
-part they own - you pay rent towards

The 2nd example seems to be a good way of getting a house without mortgage/interest payments though obviously you need enough savings to pay for your share (no idea what the typical % here is)

So is it good or bad? and why?

twirlypinky

I personally think bad.

1) A person living in the uk, earning an average or above wage should be able to afford to buy their own home with a normal mortage. By effectively loaning you up to 75% of the house's value on top of a mortgage, the government are basically admitting that houses are unaffordable for the comman man/woman.

2) Until the goverment wakes up to the fact that the answer to high house prices is NOT to loan more money, we're going to end up in a big fat mess.

I won't be using any of these schemes when I buy - I really think they're bad news.

Teacher2301

Avoid at all cost - however, I actually made money! Not to sure on the mathematics of the repayment but basically we had £10,000 key workers loan and used it as a deposit for a flat - two years later we only ended up paying £9280 (calcualted by the key worker loan company - not us) for some reason we didn't stay that long, the flat didn't go up as much and by some bizarre calculation these lenders use, we actually paid them less than we owed....work that out!

Do read the small print and ask fo an example of what you have to pay back - there are some really strange clauses in the small print - like no refurbishments without their permission (if you do get permission, you could off-set your costs agaisnt the loan as well). I'd get a layer to look carefully through and explain the 'confusing' bits.

Final advise - the market is un-predictable - save as much as you can for a deposit, then consider a logder or something to help pay mortgage. Avoid these loans with barge-poll...