Question on shared ownership / Turner report suggested cap / etc

ib0211

Shared ownership has always puzzled me. I know a few friends that have taken the plunge, and it's good because it means that they're actually buying into equity rather than putting everything into someone else's rent.

That said, I don't understand how people can be turned down for a mortgage that would come to say £600, but get accepted for a mortgage of say £350, but then have eto pay another £350 rent. I can't remember the exact details - but some friends are definately paying about £100 more on 50% mortgage + 50% rent than if they were just paying on the mortgage.

Now don't get me wrong - I think lenders should be lending responsibly. In the case of my friends, they can definitely afford the shared ownership option - but lenders felt they couldn't afford the full mortgage. I don't see the lender's logic in saying they can't afford the full mortgage but can afford a 50% mortgage / 50% rent option when the total per month is more?

With the Turner report suggesting a sensible 3 x salary maximum mortgage, people feel that house prices will fall. Of course this will happen - but will it happen as much as people are expecting? Or will shared ownership become more common? As people are told they can't afford a mortgage on a house - but are able to get a 25% or 50% mortgage and pay rent on the rest. But then the total is more than the mortgage was in the first place... Is this not as irresponsible as lending a high salary multiple?

Am I missing something?

poppysarah

It's insane people seem very happy to only buy half a house, yet repair the whole of it.

ib0211

Yup, I don't understand it myself... And just don't understand lenders' mentality. The whole shared ownership seems geared towards keeping property prices higher, and lining both banks and developer's pockets.

Surely if these schemes didn't exist, prices would have to fall? Unfortunately I think that they will get more popular with a 3 x salary cap (not that I think the 3 x salary cap is a bad idea, rather that shared ownership schemes are).