Share Equity & deposit

djamey

Hi, my girlfriend and I have been searching for part buy part rent properties, and have recently come across a perfect flat.

However we do not have a deposit, hence why we were looking for shared ownership. There is a possibility that we cannot purchase the property without a 5% deposit on our share (75%), apparently due to the current financial climate.

Is this actually the case or are we being fed a line for a sale?

Would it be best to look elsewhere?

Any information would be greatly appreciated

kells1232002

Is this a shared ownership property through a housing association?

I am currently in the process of buying a two bedroom flat on a shared ownership basis through a local housing association and most lenders require a 20% deposit on the share I am going to buy. This may have changed in the last couple of weeks as they are changing all the time. I am applying through halifax and they require a 20% deposit. Abbey required a 25% deposit and Woolwich, I think wanted a 10%. Its best to have a look around. Is the property a new build?

Joe_Bloggs

A deposit is needed these days to prove that you are a serious buyer who will put some money up for their share of the equity. It is always a good idea to budget. Spend less than your income and you will be on the road to saving. Pay off high interest debt first before bothering with significant savings in savings accounts.
More info here on numerous schemes that relate to Shared Equity.
J_B.

djamey

No i believe it is shared with the developer.

I understand the need for the deposit, but there have been many schemes, government and developer led, that do not require one.

brit1234

Sounds, dodgy. Rent, save a deposit, avoid this scam schemes and enjoy price falls comming.

djamey

Only when you are wealthy can you afford to both rent and save, for someone looking for their first property surely schemes backed by government and housing associations are a good idea, and could not be that dodgy?

Personally i would much rather pay a mortgage and invest in a property, than to be paying off someone elses.

Caz3121

djamey wrote: »

Personally i would much rather pay a mortgage and invest in a property, than to be paying off someone elses.

I previously would have agreed with you without argument but buying is renting from the bank

We have been in rented for 4 years now saving, in a great house and if anything goes wrong it is not our cost.

doing the sums we would have paid roughly the same for the interest only on the mortgage than the rent however the value of the property has dropped so, if we had bought it, we would now be in negative equity and probably need about £50k to pay it off instead we can choose to walk away at any time with a clean slate.

When house prices are on the rise there is no doubt that in the situation above there would be some equity to walk away with but that is not the current state of the market.

We will buy again at some point only for the fact that when we retire we don't want to be paying rent. Overall we will be quids in by saving and waiting.

hostman

Stay away from shared ownership, it really is a con.

I'd rather something wasn't dodgy at all instead of "a bit dodgy".

I know its hard to save. I spent two years doing so before having a large enough deposit. Reduce your outgoings, eat beans on toast every day and then buy.

Prices are going to fall further, just look at unemployment, no way are the recent gains sustainable.

iscrimger

Research the scheme you plan to use. See what others say. Research the area your buying in. I really wouldn't buy new builds as they only loose value overtime.

I currently stay in a new development, currently around 2-3 years old. Most of them sold at original sale values have now lost half their value in 2 years. They are being sold between 48-55% less than they were originally bought for. There are still first time buyers paying way over market value for these properties some of which are needing some refurbishment already - most were buy-to-let owns. The area is popular but it's slowly becoming a high tech ghetto.

Do your research! That cannot be stressed enough. I'm in an open-market scheme and I'm using my choices wisely if I decided to proceed with the scheme.

As for the deposit thing, more and more lenders are now looking for a 5% deposit for shared ownership. There are some who don't - as in some cases the reason for entering the scheme was because they couldn't afford a deposit. (I don't have a deposit, I'm sure someone will rant I should save one and I'm not going to get into the why's, suffice to say I only sleep & work right now trying to save 5% for shared ownership)

I am going to get in touch with a local mortgage advice centre, they know about the scheme I'm using and can help. I'd advise you to get in contact with yours to see if they can find a lender who doesn't have this 5% deposit.

poppy10_2

djamey wrote: »

Only when you are wealthy can you afford to both rent and save, for someone looking for their first property surely schemes backed by government and housing associations are a good idea, and could not be that dodgy?

Lots of people manage to save up while renting in order to buy their first home. Just because you want it all right now doesn't mean that that is the best option. It's people like you who got us into this mess. Shared ownership is a scam, preying on the financially illiterate like you.