First time looking at shared ownership

htafc_2008

I am looking for some advice and some help. Myself and my girlfriend are first time buyers, and we have found a house we both like, it is valued at £71,000 for a 50% share the other half being owned by a company called places for people.

I have been to my bank the Natwest and they wont deal with morgages on shared ownership houses that are not on there 'green' lists. I was hoping somebody would be able to advise me on the best practices for getting a morgage for a shared ownership house, whose good for them?, what to look out for? etc?

I would really appreciate any help anyone can offer, regards

brit1234

htafc_2008 wrote: »

I am looking for some advice and some help. Myself and my girlfriend are first time buyers, and we have found a house we both like, it is valued at £71,000 for a 50% share the other half being owned by a company called places for people.

I have been to my bank the Natwest and they wont deal with morgages on shared ownership houses that are not on there 'green' lists. I was hoping somebody would be able to advise me on the best practices for getting a morgage for a shared ownership house, whose good for them?, what to look out for? etc?

I would really appreciate any help anyone can offer, regards

Sorry if you had heard ontis a thousand times but avoid shared ownership like te plauge. All my friends have regretted it, look at other threads explaining the problems.

Monkey_Joe

brit1234 wrote: »

Sorry if you had heard ontis a thousand times but avoid shared ownership like te plauge. All my friends have regretted it, look at other threads explaining the problems.

This is a superb example of an in depth, well thought out bit of advise in regards to why shared ownership is wrong. Hopefully the OP reads your post several times, so that he can fully understand your advise since the information and arguments you provide are so vast.

Monkey_Joe

Found this via a google search....

Advantages of Shared Property Ownership

• Property ladder. Shared property ownership allows someone to get a foot on the property ladder.
• The property share can be increased. Whilst most people participating in a homebuy scheme tend to buy a 50% share, it is normally possible to increase this share when affordability permits.
• Affordability. Whilst shared property ownership has only a minimal effect on rental and mortgage payments, it helps greatly in terms of getting a mortgage. Normal income multiples would mean that getting a mortgage isn't possible for many people seeking to buy a house.
• Home improvements. It is possible to perform home improvements to the entire property under a homebuy scheme.
• Maintenance costs. The cost of property repair are divided on a pro rata basis under a homebuy scheme, depending upon the percentage of the property owned. The breakdown of repair costs will be stated in the lease. Properties are also normally new and don't usually have high repair costs.
• Selling. A person can sell their share of the property at any time under a homebuy scheme.

Disadvantages of Shared Property Ownership

• Don't have outright ownership. Any home equity has to be shared on a pro rata basis with the Housing Association under a homebuy scheme.
• Local authority waiting lists. Preference to those seeking shared property ownership is normally given to those on local authority or Housing Association waiting lists.
• Realistic valuations. There may be comparable properties in the local area that are available up to 20% cheaper than under a shared property ownership or homebuy scheme.
• Falling house prices. It can be very difficult to get a remortgage in a falling property market due to the absence of sufficient house equity.
• Less competitive mortgages. Fewer lenders currently deal with shared property ownership and homebuy schemes, especially if a borrower has bad credit. This can result in higher mortgage payments so it can be a good idea to utilise the services of a mortgage broker.
• Debt consolidation. It can be more difficult to perform debt consolidation due to the absence of sufficient home equity during the first few years.
• Property availability. There isn't always shared property ownership or homebuy scheme properties available in the area that someone wishes to live.

Shared property ownership or homebuy schemes provide someone on a lower income with a chance to buy a house.

Wutang_2

Monkey_Joe wrote: »

This is a superb example of an in depth, well thought out bit of advise in regards to why shared ownership is wrong. Hopefully the OP reads your post several times, so that he can fully understand your advise since the information and arguments you provide are so vast.

ADVICE not ADVISE.

jaysus

robin_banks

Shared ownership is a strange hybrid of owning and renting. Tbh I'd give it a wide berth.

They are notoriously difficult to sell and you don't have an automatic choice as to who you sell to, the Housing Association decide that.

Only 3% stairgate.

Muhasib

robin_banks wrote: »

Shared ownership is a strange hybrid of owning and renting. Tbh I'd give it a wide berth.

They are notoriously difficult to sell and you don't have an automatic choice as to who you sell to, the Housing Association decide that.

Only 3% stairgate.

what's 'stairgate' ???

getmore4less

Exit plan.

If you are doing this because it is all you can afford then you MUST have visibilty of increased income, without it you are trapped at the current share.

Can you sell to anyone, if you need approval then that is a very big risk.

wildbird

OP, thought I'd balance this out a bit.... here's my POV:

I have 50% share in a 2 bedroom flat, I've been here 3 1/2 years. I live alone and I couldn't have possibly afforded to buy outright if it wasn't for the shared ownership scheme. Not even a bedsit in my area!

It isn't impossible to get a mortgage, I'm with Nationwide and Abbey did them too, although not sure now they're Santander.

I don't consider it's worth it to buy any further share as the mortgage on the other 50% would be much higher than the rent (My plan is to save for when I can afford to move on)

As far as I'm aware re-mortgages are not permitted.

I would check what the arrangements are for re-sale too, different housing associations will have different stipulations, eg, when you come to resale they may have a right to market it for so long before you can yourself.

I agree that they can be difficult to sell, some properties in my block have been up for sale for some time (I'm wondering if this is to do with the difficulty in getting a mortgage or the fact that in my area there have been hundreds of new flats built)

I'm happy that I was able to stay on the property ladder due to shared ownership, but I would consider it carefully. Do make sure you know exactly what the terms are before you commit. HTH.

VIGILANT22

Quote: As far as I'm aware re-mortgages are not permitted.

If that was the case how would people staircase?

wildbird

Apologies, I was unclear. I mean re-mortgaging to take a further advance, e.g. to fund improvements rather than to staircase.