Ownhome scheme

londongirl

cat695 - i will have a think as to whether i want to post my own exact figures on a public forum. Maybe i will. I have in the past put speculated figures befor i bought it but posting would mean a lot of financial info that i need to decide if i am comfortable putting out on this form. So i hope you understand if i take a few mins to decide. But first please explain HOW i will end up paying more than you if we both buy 100k flat at same time, me with ownhome and you with 25k deposit.

Perhaps you are right - i can't see how at the moment but willing to try and understand. If you are right then i am still happy with my decision to buy this flat as i woulnd't have been able to otherwise - and i wouldn't have been able to afford to rent here either so different choice for different peoples own situations.

Wickedkitten

The 100k was purely as example on how you would be paying over the odds on a shared ownership scheme, I just made it 50% to make it easy but either way it's going to be more than if you had saved up even a 15% deposit.

If they correct massively and you have bought at the same time as someone who bought the whole thing outright you are in a better position as you only have 50% of the fall not 100% and you are then in a position to buy the other 50% at less than you would have when you first bought the house.

Not really, the person with the 50% deposit will have that as a buffer so if prices dropped and they had to sell their flat for 175k, they could still pay off the 100k mortgage and have 75k in equity.

If you had to sell your flat at 175k, you would have to pay off the 100k mortgage and 87,500 on the equity loan (50% of the final value of 175k) which would leave you 12,500 short.

Cat695

londongirl wrote: »

cat695 - i will have a think as to whether i want to post my own exact figures on a public forum. Maybe i will. I have in the past put speculated figures befor i bought it but posting would mean a lot of financial info that i need to decide if i am comfortable putting out on this form. So i hope you understand if i take a few mins to decide. But first please explain HOW i will end up paying more than you if we both buy 100k flat at same time, me with ownhome and you with 25k deposit.

Perhaps you are right - i can't see how at the moment but willing to try and understand. If you are right then i am still happy with my decision to buy this flat as i woulnd't have been able to otherwise - and i wouldn't have been able to afford to rent here either so different choice for different peoples own situations.

Nope I fully understand

I'm trying to point out that with a large deposit (I'll use 25% which is what I currently have) i would get a discount (if they didn't i wouldn't buy it)

then I would only need to mortgage what I don't have......so lets say 100k flat...I get 5 k off because I have a deposit of 25k....i get a mortgage for 70k.

all I now have to pay is that 70k

you though you still have to pay the 100k....so not only will you have a mortgage but you still have to find the other money for the ownhome...yes you may have 5/10 years to do it. but its still money you will need to find.


I think that makes sense

londongirl

Hi Cat695 - i think i must be being a bit dense becuase i still don't get it!! Sorry!!

Who is that is going to give you a discount on the flat price for having 25% deposit? The seller? I'm sure they don't care whether you are funding the purhcase with a deposit, a 100% mortgage or whatever as long as they get the price they want.

The mortgage company? You mean a discount on mortgage rate? Well i got that. The Coop counted my 40% equity loan as a deposit (as they are not having to give me a 100% mortgage) and therefore i got a better mortgage rate than someone would have with a 25% deposit.
http://www.co-operativebank.co.uk/servlet/Satellite/1193206369457,CFSweb/Page/Bank-Mortgages

You would obviously be in a better position being able to choose any mortgage company that would give you a mortgage whereas i had to go with the Coop. However as i said -currently i'm very happy with the fact i'm only paying 1.49%

Again sorry if i still don't understand how you would be getting something cheaper! You would have saved over the years to get your 25% deposit. I intend to save the money while i am already living in the flat that i've bought so that i can buy the rest later.

Cat695

londongirl wrote: »

Hi Cat695 - i think i must be being a bit dense becuase i still don't get it!! Sorry!!

Who is that is going to give you a discount on the flat price for having 25% deposit? The seller? I'm sure they don't care whether you are funding the purhcase with a deposit, a 100% mortgage or whatever as long as they get the price they want.

The mortgage company? You mean a discount on mortgage rate? Well i got that. The Coop counted my 40% equity loan as a deposit (as they are not having to give me a 100% mortgage) and therefore i got a better mortgage rate than someone would have with a 25% deposit.
http://www.co-operativebank.co.uk/servlet/Satellite/1193206369457,CFSweb/Page/Bank-Mortgages

You would obviously be in a better position being able to choose any mortgage company that would give you a mortgage whereas i had to go with the Coop. However as i said -currently i'm very happy with the fact i'm only paying 1.49%

Again sorry if i still don't understand how you would be getting something cheaper! You would have saved over the years to get your 25% deposit. I intend to save the money while i am already living in the flat that i've bought so that i can buy the rest later.

Currently this is a buyers market (reccession and all that) you just have to look on rightmove at the properties that don't reduce their price are simply not selling...(some are over a year now)

ok so you got 40% off ownhome and a 60% mortgage

you still have to pay that 40% off within a time frame....with that (saving)on top of your mortgage.

londongirl

Yes but who are you getting this discount off that you are talking about?

The situation we were using was two people buying the same type of house at same time - one with ownhome and one without - so why would the one with the deposit get a discount off the price and the person buying with ownhome wouldnt'?
Sorry you didn't really answer the question.
I know its a buyers market - i got 19k of the original asking price of my flat and i would have got that whether i was buying with ownhome or not - thats the bit i don't understand what you are getting at?

And luckily i don't have to pay ownhome back in 5 or 10 yeras - it is 25 years and the first 5 years is interest free. So with my mortgage for 60% and your mortgage for 75% of the property price you will be paying more back than me in the first 5 years.

Cat695

londongirl wrote: »

Yes but who are you getting this discount off that you are talking about?

The situation we were using was two people buying the same type of house at same time - one with ownhome and one without - so why would the one with the deposit get a discount off the price and the person buying with ownhome wouldnt'?
Sorry you didn't really answer the question.
I know its a buyers market - i got 19k of the original asking price of my flat and i would have got that whether i was buying with ownhome or not - thats the bit i don't understand what you are getting at?

And luckily i don't have to pay ownhome back in 5 or 10 yeras - it is 25 years and the first 5 years is interest free. So with my mortgage for 60% and your mortgage for 75% of the property price you will be paying more back than me in the first 5 years.

Its hard to show you without real figures......do you have to pay back that 40% at the current market value??

and my 5 years against your other 20 years of rising interest out ways what I am paying

londongirl

Yes at current market value after 3 years (within 3 years if you want to pay all or some of it back you can at the same amount you borrowed it for).

So as everyone is saying prices are going to drop even further i'm in a better position. Two people buy a house today - one with ownhome , one without. First person pays 100k (60k mortgage, 40k ownhome) and 2nd person pays 100k (25k deposit, 75k mortgage).
House prices drop by a further 25% both houses therefore worth 75k. Person with ownhome - now owes ownhome 30k not 40k if they want to buy the rest of their house. Therefore total price paid is 90k. Person two with deposit has still paid 100k. If they want to sell they have lost their 25k deposit. Person 1 has lost only 15k (well would have to find 15k as would be 15k short - however buy paying less mortgage and buying an affordable house to them in the first place hopefully they would have been able to save)

londongirl

oh and it isn't 20 further years of rising interest - it is five years interest free, then 5 years at 1.75% (of the loan amount - in my case 50k - not the value at the time) and then rest of it is 3.75% again at the loan amount taken out at the time, not the rising value if house prices rise.

Cat695

londongirl wrote: »

Yes at current market value after 3 years (within 3 years if you want to pay all or some of it back you can at the same amount you borrowed it for).

So as everyone is saying prices are going to drop even further i'm in a better position. Two people buy a house today - one with ownhome , one without. First person pays 100k (60k mortgage, 40k ownhome) and 2nd person pays 100k (25k deposit, 75k mortgage).
House prices drop by a further 25% both houses therefore worth 75k. Person with ownhome - now owes ownhome 30k not 40k if they want to buy the rest of their house. Therefore total price paid is 90k. Person two with deposit has still paid 100k. If they want to sell they have lost their 25k deposit. Person 1 has lost only 15k (well would have to find 15k as would be 15k short - however buy paying less mortgage and buying an affordable house to them in the first place hopefully they would have been able to save)

Yes fully agree but if and when house prices do rise and especially if they rise at the rates they have done you are going to be far worse off.......

and how are you saving to pay off 50k??