Shared Ownership

muddypaws2807

Hi

Are shared ownership properties a good idea?

To cut along story short, I got stung by my ex financialy and have managed to get back on to my feet, got a job earning £30k pa, I am debt free after going through a IVA (I have no debt whatsoever). I have been renting since splitting 5 years ago and am 44 years of age and single. I am worried that I do not have "bricks and mortar" I have managed to save £5k, I have a pension which I have only taken out 2 years ago

My question is should I be looking at contnuing to rent but what happens when I retire?

Should I look at a shared ownerships scheme that the govenrment offer ie 70% ownership

Try for a mortgage of 15 years I can afford £600pm on a repayment scheme but given my credit hisroty will this happen

I am so confused?

Finally, just to add to the mix my dad is itching to downsize but petrified of moving, his house is worth £160k of which half is mine and my brothers (after deducting what dad needs for his new house £40k). I was thinking would it be wise for me to buy my brother out and buy my dads house? ie I get a mortgage for £60k. I think my dad will then not want to move out (thats another story) but the house does need work on it, its a dump. Not sure which is my better option

Thrugelmir

muddypaws2807 wrote: »

Hi

Are shared ownership properties a good idea?

To cut along story short, I got stung by my ex financialy and have managed to get back on to my feet, got a job earning £30k pa, I am debt free after going through a IVA (I have no debt whatsoever). I have been renting since splitting 5 years ago and am 44 years of age and single. I am worried that I do not have "bricks and mortar" I have managed to save £5k, I have a pension which I have only taken out 2 years ago

My question is should I be looking at contnuing to rent but what happens when I retire?

Should I look at a shared ownerships scheme that the govenrment offer ie 70% ownership

Try for a mortgage of 15 years I can afford £600pm on a repayment scheme but given my credit hisroty will this happen

I am so confused?

Finally, just to add to the mix my dad is itching to downsize but petrified of moving, his house is worth £160k of which half is mine and my brothers (after deducting what dad needs for his new house £40k). I was thinking would it be wise for me to buy my brother out and buy my dads house? ie I get a mortgage for £60k. I think my dad will then not want to move out (thats another story) but the house does need work on it, its a dump. Not sure which is my better option

Nothing wrong with shared ownership schemes. As it allows people to get a foot on the ladder than otherwise could.

You mentioned paying rent after retirement. Unless you bought the property outright eventually under a shared ownership scheme you will always be paying rent.

Suggest you have a family pow pow with regards to the rest.

BrianGee

Hi there,

This is my first post on this forum so please bear with me if I fail to adhere to any MSE etiquette!!

I am in the process of buying a 25% share in a Shared Ownership 1 bed flat in East London. The full value of the flat is £155k.

I am taking out a 35 year loan for £38910 which I already have a 10% deposit for.

Now my mortgage rate is a fixed rate of 7.89% for the first 3 years and then a variable rate, currently 5.89% for the reamaining 32 years. Total repayable: £83k (is this steep???)

Now I dont plan to live there for 35 years but hope to sell up in 3-4 years time. I am 27yrs old and the property is very close to the Olympics.

What do you guys think of the above? I hope I dont achieve negative equity when I decide to sell up.

I am understandably nervous about the total repayable. Can you please advise?

Many thanks.

Thrugelmir

BrianGee wrote: »

Hi there,

This is my first post on this forum so please bear with me if I fail to adhere to any MSE etiquette!!

I am in the process of buying a 25% share in a Shared Ownership 1 bed flat in East London. The full value of the flat is £155k.

I am taking out a 35 year loan for £38910 which I already have a 10% deposit for.

Now my mortgage rate is a fixed rate of 7.89% for the first 3 years and then a variable rate, currently 5.89% for the reamaining 32 years. Total repayable: £83k (is this steep???)

Now I dont plan to live there for 35 years but hope to sell up in 3-4 years time. I am 27yrs old and the property is very close to the Olympics.

What do you guys think of the above? I hope I dont achieve negative equity when I decide to sell up.

I am understandably nervous about the total repayable. Can you please advise?

Many thanks.

The longer the term of the mortgage the more interest you'll end up paying. If possible pay more to shorten the term.

Forget the Olympics. With only a 25% share, by the time you factor in buying and selling costs, plus the high rate of interest you will be paying. Your profit (if any) isn't going to make you wealthy.

Buy for the right reasons.

BrianGee

Thrugelmir wrote: »

The longer the term of the mortgage the more interest you'll end up paying. If possible pay more to shorten the term.

Forget the Olympics. With only a 25% share, by the time you factor in buying and selling costs, plus the high rate of interest you will be paying. Your profit (if any) isn't going to make you wealthy.

Buy for the right reasons.

Thanks for your reply.

I'm currently just shy of £25k per annum salary (hoping to get closer to £30k next year) and my monthly outgoings for the flat will be £630 (rent and mortgage). I reckon if I were to shorten the repayment term then I might struggle with the repayments.

What do you think of the total £83k repayable on a £39k loan? It seems very steep to me but I'm new to all this so this might sound OK to most people.

Main reason I am buying is that I want to get on the property ladder and I dont have a large deposit to put down for a mortgage etc.

As a single person, I feel that I can repay the mortgage as well as put some money aside for a large mortgage at the same time. So I hope that if I make a couple of grand on the sale of the property and combine that with the money I save, I can have enough for a deposit in 3-4 years time.

As always, I'm open to advise as I'm a first time buyer and it seems that Shared Ownership is the way to go for most people in the current financial climate.

Cheers

Helga14

7.89% interest sounds really high to me. I got a fixed rate of under 4% last week. Have you got a bad credit rating? have you shopped around for other mortage lenders. I did shared ownership three years ago. I staircased for the third and final time on Friday last week. My advice is to buy as much as you possibly can to start off with. You should be aiming to be able to buy the whole property at sometime. Re-selling can be hard of %'s so my aim was to one day I would own 100% and now I do... well i have a massive mortgage which I can manage. Do the maths and look at what you can afford. Can you afford to buy more, what are the cost differences? For me at first each £10k of property worked about £100 a month in mortgage or £50 in rent.

First I'd try to get a better rate of lending if I were you.

Thrugelmir

BrianGee wrote: »

Thanks for your reply.

I'm currently just shy of £25k per annum salary (hoping to get closer to £30k next year) and my monthly outgoings for the flat will be £630 (rent and mortgage). I reckon if I were to shorten the repayment term then I might struggle with the repayments.

What do you think of the total £83k repayable on a £39k loan? It seems very steep to me but I'm new to all this so this might sound OK to most people.

Main reason I am buying is that I want to get on the property ladder and I dont have a large deposit to put down for a mortgage etc.

As a single person, I feel that I can repay the mortgage as well as put some money aside for a large mortgage at the same time. So I hope that if I make a couple of grand on the sale of the property and combine that with the money I save, I can have enough for a deposit in 3-4 years time.

As always, I'm open to advise as I'm a first time buyer and it seems that Shared Ownership is the way to go for most people in the current financial climate.

Cheers

Don't forget to budget for service charges for the flat. Heard some horror stories recently in the news of rapidly increasing charges.

If you can afford to save then above having an emergency fund, pay down the mortgage. Its highly unlikely that the interest earnt on your savings will outperform the interest paid on the mortgage.

As Helga14 says you should have the aim of owning the property outright. Then you'll be in the best possible situation whatever your circumstances in the future.

The interest rate does sound high. So shop around to see if you find a better deal.

BrianGee

Thrugelmir wrote: »

Don't forget to budget for service charges for the flat. Heard some horror stories recently in the news of rapidly increasing charges.

If you can afford to save then above having an emergency fund, pay down the mortgage. Its highly unlikely that the interest earnt on your savings will outperform the interest paid on the mortgage.

As Helga14 says you should have the aim of owning the property outright. Then you'll be in the best possible situation whatever your circumstances in the future.

The interest rate does sound high. So shop around to see if you find a better deal.

I did think of buying a larger share of my property but I'm not sure if I'll be able to afford the mortgage repayments on this nor do I have the deposit for this either.

The service charge is included in the rent fee quoted in my earlier post. My HA say that the service charge wont go up until April 2011.

Unforunately there arent many mortgage lenders who operate in the shared ownership field.

I think I will go ahead with this property as its close to home and I can afford the repayments. But I just hope I dont run into difficulties in the future when I decide to sell up. I will need to talk to my mortgage adivsor about the process for this.

Thanks again.

Thrugelmir

Hope that all goes well. Best to view the property as a home not an investment.

haras_nosirrah

With a 10% deposit on a newbuild flat your only option is Leeds (7.89%) if you can increase to a 15% deposit you could use the Woolwich (6.39%) but they also charge £1200 upfront (val and arrangement fees) more than leeds do

ohit

With shared ownership schemes, what is common terms on extra/early repayments on the mortgaged (non-rented) shared?

My thinking is: Would it be possible to buy a shared ownership property, say an initial 30% share with a mortgage, while obviously pay rent on the rest. Then make overpayments on the mortgage (instead of buying further shares).

Then at some point, re-mortgage the whole lot, with the 20-30% equity share owned with no mortgage (due to overpayment having been made earlier), and end up buying the rest through the mortgage.

How does that sound?

Overpayments on mortgage can usually be much smaller amounts every so often. Whereas buying extra shares in the property has to be a minimum amount (i.e. 10% blocks) and at the valuation at the point of buying more.

It looks like I may be going into a fortunate situation where I could potentially pay-off the 20-30% share part within a few years of buying.
Either way, I am currently researching ways of moving away from the family home (I have to anyway, new job down south)