House Experts - is this dodgy?

In_debt_5

I have just been browsing Right Move and come across this advert. How does it work, looks quite dodgy to me? Am I right to be sceptical?

mumoftwoandapig

Maybe it's a mistake?

googler

If you add a zero to the price, does it seem reasonable?

musingsofnikki

if you read on:

Can't get a mortgage? Just 'rent' it for £750pcm and buy when you can (all rent taken off the purchase price.)

This is how it works

The purchase price is £190,000
Minimum deposit of £10,000
The rent is £750 per month towards your deposit.

kunekune

In other words, you are a tenant. With the security of tenure any tenant gets, ie, not much. If they decide to end the tenancy agreement or you fall behind, what do you get back? The £10,000? More? They promise to take the rent off the purchase price - but what if prices have dropped? Can they be forced to sell to you if the value rises? There are all sorts of pitfalls.

carefullycautious

I think dont touch with a barge pole comes to mind. Overpriced certainly, and I think ' Phil' thinks we have all come on a banana boat too.

clutton_2

this transaction would probably be done via an Options Agreement and is perfectly legal

rosie-lee

would never consider such a thing. will become the the subject of a watchdof feature in years to come I expect.

Remember, what the MP's squandered was legal
Wheel clampers are legal

A lot of legal business arrangements often end up with one party being an unsuspecting and niave loser.

In_debt_5

carefullycautious wrote: »

I think dont touch with a barge pole comes to mind. Overpriced certainly, and I think ' Phil' thinks we have all come on a banana boat too.

This is what I thought. It is way out ofour price range at the full asking price so definitely won't be touching it!

Thanks all for your replies

lincroft1710

Perhaps it like one of those car buying schemes where at end of 3 years you either hand car back or pay remaining balance in one lump and keep car.

I'm not well up on Harborne prices, but £190K seems a lot of money for a house like this one.

lynzpower

Hi the OP

I actually looked at this for a house that OH and I saw on Rightmove. Ill see if i can find it.
We stumbled on it as we are browsing in that area.

The purchase price is £249,995
Minimum deposit of £4995 ( they presume because you have to go in for this sort of deal, your skint)
The normal rent is £220 per week ( OK)
On top of that you will pay a minimum of £58 per week towards buying. ( ie you are overpaying your own mortgage by 251.33pcm using this "funding stream"
To help you we will also add a minimum of £58 per week towards your deposit. ( and so will they- mortgage paid off to the tune of 6032 pa)

Instead of paying dead rent you are saving towards buying this house. ( ie overpaying your mortgage)


This is how it works:

End of year 1

£249,995
-£4,995 deposit paid
-£3,000 (extra you have paid)
-£3,000 (extra we have paid)

At the end of year 1 you would owe £239,005

At the end of year 2 you would owe £233,005
At the end of year 3 you would owe £227,005

During that time you have saved up a deposit of £22,915 (9.2%)

Any improvements you make to the property you get the benefit.

If the value of the property has increased you also get the benefit.

Now lets have a look if you pay a bigger deposit and £40 more per week.

£249,995
-£8,000 deposit paid few extra K here
-£5,720 (extra you have paid)
-£5,720 (extra we have paid)

At the end of year one you would owe £230,555
At the end of year two you would owe £211,115
At the end of year three you would owe £191,675

During that time you have saved up a deposit of £42,320 (20%)

The more you pay the quicker and bigger your deposit.


No mortgage is required until you buy in 2012. (but you can buy at any time)

If we put in a thousand pounds a week, so will they (would be a pretyuy optimistic val) . So we could drip feed the rest of ur deposit in that way. We have a good years worth of payments in our cash deposit fund.

So if the house is 249

They will clearly only tolerate this agreement for 3 years tho

I was certainly very sceptical when I saw this, but I looked at it for us adn it seemed like a very good idea.- its jsut whether the solicitor would be happy with what they see. IIRC it seemed to work out really well for us, as the deposit that they would match. They presume you have no money, so put down 5k and they will pay 5k. However if you put down 30k, they put down 30k, so it looked to real;ly stack up for us, as ver half the capital of the property would be paid down in the first 3 years, with the projected overpaying adn them matching that overpayment.

The house isnt right for us though. But the scheme wouldnt be a write off to me, i jsut has to do what it says it will do and its winner. Although I do feel that the property was overpriced by about 20k so i suppose thats part of it.

One issue though on the buyers side of this is that the property presumably isnt valued by a surveyor until possibly 3 years time. In which case Im sure values will be lower than what they are now. So with this in mind maybe one would get a even better deal then ?

Too many unanswered questions for me, but I would certainly consider this deal if the right house came up with it. Whether id go through with it i dont know, but I would definately consider it.