Ownhome scheme

londongirl

No worse off than I would be had I not got on the property ladder in the first place.

You can't say it both ways - be worse off if property price falls and be worse off if it rises! If it rises and i hadn't bought with ownhome then that means i would never be able to own my own home ever?

As for me personally how I am going to pay back the 50k - well (ok and this involves my letting you know my exact figures so here we go).
I bought a property for 125k
Got a mortgage for 75k. Ownhome loan for 25k.

I have 20k in the bank - which i chose not to use for a deposit as i didn't want to risk losing that to negative equity -would rather only be taking 60% of the risk not 100% at this point in time. I was offered a mortgage of 100k but chose to take the minimum ownhome required me to which was £75k. (Actually it was £78k but they then realised i had to own full 5% chunks not 1% etc so they asked me if i wanted it rounded up to owning 65% or down to 60% and i chose down - so mortgage only 75k).

So, if i wish to own the whole lot i am only 5k away from doing so. Could increase the mortage by 25k (and that is on my salary now whereas i will hopefully be earning a couple of grand more in a year or two) and i have 20k in the bank. I am putting up to £200 away in a savings account each month (well some months less if i have bought furniture or stuff for flat). I will either use this to boost my savings or pay off more of the mortgage as an overpayment. Therefore within 3 years i will have saved or paid off the further 5k. It will be more than this if interest rates stay so low - more like 7k but i assume they are not going to and when interest rates rise i will not be able to save so much per month unless my salary has also gone up by then too.

If house prices rise and i choose not to buy the rest of the share then i sell and have at leat made some money on my 60% share . If i was renting and house prices rise, i won't have made any money and i would be in a worse position to get on the property ladder at that point in time since the price would be even more out of my reach.

Graham_Devon

Wickedkitten wrote: »

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.
.

Sorry, but your analogy made absolutely no sense at all.

You may aswell compare 2 neighbours, buying the same house for 200k, one with a 50% deposit, and one with a 10% deposit, and then say the people with the 10% deposit are stupid as they will pay more than the neighbours.

Well of course they will, they have taken a bigger loan. This happens everywhere in everything that people take loans out for.

Wickedkitten

Graham_Devon wrote: »

Sorry, but your analogy made absolutely no sense at all.

You may aswell compare 2 neighbours, buying the same house for 200k, one with a 50% deposit, and one with a 10% deposit, and then say the people with the 10% deposit are stupid as they will pay more than the neighbours.

Well of course they will, they have taken a bigger loan. This happens everywhere in everything that people take loans out for.

That's the case of someone taking out what is basically one loan compared to two.

Graham_Devon

Wickedkitten wrote: »

That's the case of someone taking out what is basically one loan compared to two.

It still makes no difference.

Your analogy was completely flawed as it's the same whatever scheme you use. You do NOT pay any more for the house because you have less of a deposit. You simply pay more interest, which is exactly the same as taking any mortgage. The bigger the deposit, the less interest you will pay. Doesnt mean the house becomes cheaper.

Wickedkitten

Graham_Devon wrote: »

It still makes no difference.

Your analogy was completely flawed as it's the same whatever scheme you use. You do NOT pay any more for the house because you have less of a deposit. You simply pay more interest, which is exactly the same as taking any mortgage. The bigger the deposit, the less interest you will pay. Doesnt mean the house becomes cheaper.

Where did I say you pay more for the house? The only bit that I have stated that you pay more on is where you have to pay off the equity portion which someone with a deposit that isn't a loan wouldn't have to worry about. Or are you saying that's false?

Graham_Devon

Wickedkitten wrote: »

Where did I say you pay more for the house? The only bit that I have stated that you pay more on is where you have to pay off the equity portion which someone with a deposit that isn't a loan wouldn't have to worry about. Or are you saying that's false?

No. I am saying thats exactly the same with any type of home ownership where you require a loan.

Wickedkitten

Graham_Devon wrote: »

No. I am saying thats exactly the same with any type of home ownership where you require a loan.

There is a reason why pretty much every other bank and building society doesn't give mortgages to people who use a loan as a deposit and the only bank you can use this scheme with is the co-op bank.

londongirl

And what are those reasons Wickedkitten?
Just because you are buying with ownhome doesn't mean you don't have a deposit of your own as well so in that case no different to anyone else. In actual fact a bank would do better with someone who has an ownhome loan of 40% than someone who has a deposit of 10 or 20%. If either home was repossessed - the 1st charge on the person who has the ownhome loan is to the Coop which means they get paid any money they are owed on the mortgage first. So if the property is in negative equity and shortfalls a certain amount -Coop gets their money first and Ownhome will chase the person for the rest that they are owed.

Also its only the co-op with Ownhome but there are other shared equity schemes like mychoice homebuy where you can go with other mortgage providers. So not really sure what you mean by that?

Graham_Devon

Wickedkitten wrote: »

There is a reason why pretty much every other bank and building society doesn't give mortgages to people who use a loan as a deposit and the only bank you can use this scheme with is the co-op bank.

Thats not my issue.

My issue is that someone has come looking for help and a couple of people have fabricated soemthing about the house being a con as they set them more expensive, and then using your bizzare analogy to prove that point.

carefullycautious

Hi Londongirl, you are the ideal person to be in this scheme as you have thought it through properly. Also you are the first person I have read who has given an intelligent slant to the benefits of this scheme. You have obviously not tried to be greedy by buying a large property with a big mortgage, but have shown restraint and brought within your means. I must admit I did not realise that you could have a decent amount in savings and be eligable for this scheme. This has put you in the excellent position of being able to purchase the full amount if you so wish. Thanks for the enlightened post, hope others who are considering this take a leaf out of your book. Enjoy your home