Part buy Part Rent property Mortgage

Phyzelda

Hi guys,
Quick questions for you mortgage brains out there.

My fiancee and I are currently looking into getting a mortgage in place for a property we have seen.

Its a 50% share (Rent:Mortgage)

What would you recommend? Ideally would like a maximum of 5% deposit required.

Total mortgage £78000

Thanks

CloudCuckooLand

Unless its through a Govt scheme, i.e. keyworkers etc, you will struggle to get 95% LTV.

haras_nosirrah

Min for shared ownership is currently a 10% deposit (I do financial assessments for a housing association for shared ownership)

If you only have 5% could you negotiate and see if you could buy a smaller share - they may allow if other people are paying for a higher share as they generally need to get a balance of a certain percentage accross the whole development)

Alternatively you will need to save. Remember you will need solicitors, mortgage and valuation fees on top of any deposit you have to pay.

poppy10_2

Shared ownership is a scam. Avoid.

DesertFlyer

poppy10 wrote: »

Shared ownership is a scam. Avoid.

Could you support this comment - why exactly is it a scam?

I'm looking at a similar shared ownership property when I return to the UK. It is almost impossible for a single, first time buyer to get on the property ladder in London - with many banks still looking for min 25% deposit this equates to over £60k deposit for a 2 bed flat! If you can get 90% LTV then you pay through the nose on the interest.

Shared ownership makes it feasible to get a 50% share in a 2 bed property and renting out the other room covers the rent required by the developer. You also retain the right to buy subsequent stakes as and when you are able to do so.

Phyzelda - if you find a good bank offering a decent mortgage do let us know.

CloudCuckooLand

DF - one of the problems with Shared Ownership, is that if it takes a 25yr mortgage to get 50% of a house, its going to take a second 25yr mortgage to get 100% of a house.

Who wants to be paying a mortgage out of their pension when they are 70+...?

The unaffordability that you rightly mention is being supported by SO schemes which allow developers to maintain high prices thereby necessitating the schemes; the definition of a vicious circle.

DesertFlyer

CloudCuckooLand wrote: »

DF - one of the problems with Shared Ownership, is that if it takes a 25yr mortgage to get 50% of a house, its going to take a second 25yr mortgage to get 100% of a house.

Who wants to be paying a mortgage out of their pension when they are 70+...?

The unaffordability that you rightly mention is being supported by SO schemes which allow developers to maintain high prices thereby necessitating the schemes; the definition of a vicious circle.

The idea is that you re-finance when in a position to cover the full mortgage and never exceed 25 years on the total product.

Personally, I could afford the payments on a full mortgage now - it is the deposit that is the issue.

Also as a first time buyer I would not be looking to spend the rest of my life in this place therefore half ownership is fine, provided I rent out the other half. Very simply, it would be like buying a 1 bed flat.

dimbo61

Shared ownership has its problems
The housing assocation may not allow sub letting or lodgers
When you come to sell you have little or no equity ( in current market ) and some times cant sell at all.

MortgagePerson

DesertFlyer is spot on

The low cost shared ownership government schemes allows a FTB to get onto the ladder with the minimum deposit based on the PP of the low cost house Not a scam in any way

As time goes on and salaries increase you can take out and own more equity until its 100% owned and/or purchase another house using the revised equity gained in the shared ownership house as a deposit on a taditional purchase Its a win win situation

you know it makes economic sense

For the record some countries have 100 year mortgages handing them down to their family, Zimmers included lol

DesertFlyer

dimbo61 wrote: »

The housing assocation may not allow sub letting or lodgers

I wasn't aware of that - definitely worth looking in to.

dimbo61 wrote: »

When you come to sell you have little or no equity ( in current market )

I think that is the case for pretty much anyone who bought over the past couple of years, shared ownership has little to do with it, think of all the pople who managed to get 100% or even higher LTV in 06/07! I'm looking at shared ownership because,IMHO, over the course of 5 years I expect to see a recovery that would not leave me in negative equity.

dimbo61 wrote: »

and some times cant sell at all.

Valid point - I can see that if you still only own 50% when you wish to sell then this could cause problems. Some careful consideration of how long the property is required for, and exit strategy is needed before entering into shared ownership.

CloudCuckooLand

"When you refinance" etc.

That might be your plan, plus there are others who plan to overpay immediately, fine. But I'd bet most who need to use SO are doing so at the very edge of affordability already, so re-financing is going to barely maintain the status quo, never mind be able to take on extra equity quickly, as Interest Rates going up are very likely to end up with re-mortgaging pain for many.


"As time goes on, salaries increase you can afford more equity" etc.

Sounds find, if you say it quick. But in reality, as salaries increase, families are started, people need to have a bigger house, etc which eats up the increase in salary before you make the equity step up.


"Some countries have 100 year mortgages"

Yes, like Japan where just Tokyo city centre was valued at something like more than the whole of California, until the big bust came and upto 70% loss in values.