How does his work, help please.

stratdude

Hi,
My partner and I are looking to buy our first home. We have looked around and the best offer for us seems to be this 50% shared deal. for this post lets say we have found a home at £150,000 so we need a mortgage for £72,500 and then we pay 2.75% rent on the other half.

I get this fine. My question is with mortgage applications. We have very little or no deposit but as we are only after 50% of property price do we need it? I know tradionally if a house was £100K the bank would lend only £85K and we need to stump up the £15K to make 100% but as the housing association is putting up 50% do they see this as the deposit? If not it looks like we need to do some more saving!

If this makes no sense im sorry but it's hard to explain.

Comyface

You are making sense, don't worry!

You will still need a deposit for shared ownership, it will be a percentage of your share. So, to use your example, if the property is worth £150k and you're buying 50% of it, you'd need 10% (min deposit at the moment) of £75k (=£7500). You'd then take a mortgage out for £67,500. The HA part is not considered because that part is not used as security for the mortgage, only the bit you are buying is.

michael1983l

The shared ownership schemes I have applied for need no deposit. Mychoicehomebuy and Ownhome schemes. The money is put up by the government or housing associations, the house is then purchased in full with two loans, one to the bank and one to the government. The bank gets first share in the case of reposession and what ever is left over the government get. So effectivly the government are guaranteeing your mortgage in this case.

I don't know what particular scheme you have choosen but this is the case for the two I mention.