Shared Ownership undervalued by 10 grand

forgotmylogin

Have posted here before but can't remember my login.

Mypartner and I are buying a shared ownership place and will be getting a 40% share and paying rent on the remainder.

Problem is the lenders valuation has come in £10,000 undervalued. The lenders have sent us a mortgage offer but we will need to find an extra £3,600 on top of our deposit to buy the flat.

The lenders and housing association have been arguing for weeks and neither is prepared to budge, so do we pay the extra for a flat that is likely to be overpriced or do we walk away and lose the money we have paid so far in terms of conveyancing etc.

We are likely to move anyway as we need a bigger place, we had worked out that if we did not buy we could be debt free within a year, part of me thinks sod it, rent somewhere clear debt and then hammer away some savings and buy an open market property in a few years. (This is the last time we would be able to do shared ownership as we will be earning too much.)

So, those peeps in the know, should we do our dammdenst to get on the ladder or should we wait and see what happens with the economic climate interest rates etc?

Many thanks.

tuftyclub

I rarely post .. but when you already in debt considering taking on new debt when you are getting alarm bells about the flat incorrectly valued (i.e the sellers are overvaluing , the lender could be giving a correct valuation ) I would think that unwise

Save and clear your debt

Joey122

forgotmylogin wrote: »

Have posted here before but can't remember my login.

Mypartner and I are buying a shared ownership place and will be getting a 40% share and paying rent on the remainder.

Problem is the lenders valuation has come in £10,000 undervalued. The lenders have sent us a mortgage offer but we will need to find an extra £3,600 on top of our deposit to buy the flat.

The lenders and housing association have been arguing for weeks and neither is prepared to budge, so do we pay the extra for a flat that is likely to be overpriced or do we walk away and lose the money we have paid so far in terms of conveyancing etc.

We are likely to move anyway as we need a bigger place, we had worked out that if we did not buy we could be debt free within a year, part of me thinks sod it, rent somewhere clear debt and then hammer away some savings and buy an open market property in a few years. (This is the last time we would be able to do shared ownership as we will be earning too much.)

So, those peeps in the know, should we do our dammdenst to get on the ladder or should we wait and see what happens with the economic climate interest rates etc?

Many thanks.

Shared ownerships are very bad value for money

Wickedkitten

forgotmylogin wrote: »

Have posted here before but can't remember my login.

Mypartner and I are buying a shared ownership place and will be getting a 40% share and paying rent on the remainder.

Problem is the lenders valuation has come in £10,000 undervalued. The lenders have sent us a mortgage offer but we will need to find an extra £3,600 on top of our deposit to buy the flat.

The lenders and housing association have been arguing for weeks and neither is prepared to budge, so do we pay the extra for a flat that is likely to be overpriced or do we walk away and lose the money we have paid so far in terms of conveyancing etc.

We are likely to move anyway as we need a bigger place, we had worked out that if we did not buy we could be debt free within a year, part of me thinks sod it, rent somewhere clear debt and then hammer away some savings and buy an open market property in a few years. (This is the last time we would be able to do shared ownership as we will be earning too much.)

So, those peeps in the know, should we do our dammdenst to get on the ladder or should we wait and see what happens with the economic climate interest rates etc?

Many thanks.

I think you have the right idea. Even if it wasn't shared ownership I would be against advising someone to pay more for a property than the lender thinks its worth.

brit1234

Shared Ownership is a way developers can get more money out of you, aka sub prime loans etc. They are a con designed to keep prices high, stay clear.

Your bank is wise to this, don't over pay. Your property is overvalued.

zzzLazyDaisy

forgotmylogin wrote: »

(This is the last time we would be able to do shared ownership as we will be earning too much.)

This is your answer.

Shared ownership can be a lifesaver - my cousin has one, and is very happy. But she has two children, is a low earner, approaching 50, and will never earn enough to buy outright (she lives in one of the most expensive areas in the UK).

But they are not ideal and there are drawbacks. If there is any chance of you being able to buy outright on the open market, then that is what you should do.

So yes, if it is possible to clear your debts, save a deposit, and get a mortgage for a house on a 'normal' purchase, then that's the way to go. No question.

As a first time buyer you won't pay stamp duty under £250k, you will have great bargaining power, there is every chance that prices have further to fall, and when you eventually come to sell you will have a much wider pool of potential buyers.

property.advert

My experience of shared ownership is as a tenant for someone who owns one but I have seen the paperwork. The rental charged is way too high and I feel the true value will always be dragged down by the fact that it is shared ownership and the high rents. I would not touch one with a bargepole unless I was utterly convinced that I could get to 100% ownership ASAP and at agreed valuations.

forgotmylogin

Thanks for all the advice, we are gonna see if the Housing Association are prepared to drop the price, if they won't it looks like they will be re-advertising it.

thewinkshow

I would stay away from shared ownerships.generally over-priced new builds that lose their value quickly.
the valuation may be bang on, and i suspect the property is in fact over-priced.

If you must get a shared ownership, then tell the vendor of the lower valuation, tell them that is the maximum you will pay, (because that is what it has been valued at) you could also get another valuation for comparison.

If the vendor will not sell at the lower valuation price, then i would request that they take the property off the market as they are obviously not willing to sell at the price is has been professionally valued at.

but personally, wait till you can afford a full mortgage - you will not regret it.

where as with shared ownership you have overvalued properties, not as much bargaining power off the price compared with a house, difficult to sell on, you only own half the place but look after 100% of the upkeep, any improvments you only see half the benefit, if its an apartment you have service fees which will only rise - for that bit more saving and maybe a extra 150 quid a month wait and get a full mortgage imo.

DVardysShadow

forgotmylogin wrote: »

Problem is the lenders valuation has come in £10,000 undervalued. The lenders have sent us a mortgage offer but we will need to find an extra £3,600 on top of our deposit to buy the flat.

The lenders and housing association have been arguing for weeks and neither is prepared to budge, so do we pay the extra for a flat that is likely to be overpriced or do we walk away and lose the money we have paid so far in terms of conveyancing etc.

When you go out to buy a property, your conveyancing fees you should always regard as a gamble. If it comes to walking away, never let the money you have spent on this stop you from walking away.

readytofly

Gosh im glad i read these posts! We were looking into shared ownership and are hoping to go to the launch of sales at new development near us - everything i read about this i get more and more wary about the whole scheme!

OP seems like you have been given some good advice, its such a huge commitment. The way i see it is - shared ownership is like renting only you cant get out of it as quickly as you could in a rental only property if something were to go terribly wrong, as you are tied to the mortgage payments. GOOD LUCK with whatever you decide x