Some advice on Lloyds Assurity scheme, please

redstararnie76

I'm sorry but I have posted this on a couple of boards because I wasn't sure which was most appropriate




Apologies in advance, but I may well be asking some stupid, obvious questions here born out of naivety.

<Bit of boring, possibly irrelevent, background information here>
My husband and I are in our mid thirties, with two young children (one school-age, one baby). We currently own 25% of a shared ownership property and have done for 4 and a half years. We now earn quite a lot more than we did then, when the shared ownership was our only option other than renting. Our family has also expanded, and we are currently being driven mad by all the problems of incredibly thin walls and living on an estate.
Because we are now on more money, we've been saving hard - paying off existing loan and credit card debt and now pulling together money for a deposit so we can move. We did initially get our house valued last year and found that (not surprisingly) it had dropped about £12,000 from the original £150,000 value since we had bought it (a quarter of that is our share).

<Some facts and figures>
The sort of house we would like to buy, we can find on RM for between about £160,000 and £180,000.

So far we have been saving around £1,000 per month and after paying off our debts, we have around £10,000. Not enough for a deposit yet. Because we are really keen to move, and we anticipate that it will take the housing association some time to process the sale, we are considering putting the house up for sale in the next month or so, and moving into rented accommodation once we have sold so that we can continue saving, and when we come to buy, we can move straight away.

<Dilemma>
We have some doubts about this course of action, and have wondered if we might do better waiting until we have the £20,000 or so before selling. My Dad (who is normally very cautious) has said that he strongly believes that we should sell now and has said that, although they can't give us the £10,000 shortfall, 'there are ways they can help us'. One thing that has been mentioned is that Lloyds may let them 'assure' (I think!) part of the deposit with their savings.

<Phew, if you got through all that>
<The questions>
Does anyone know anything about this Lloyds' scheme and can they let me know anything else about it? The last thing we want is to risk losing my parents savings if something happens to one (or worse, both) of our jobs etc.
Does this whole plan sound doomed?

Many thanks for sticking with me through this mammoth post and I'm grateful in advance for any opinions.

Fire_Fox

Your post is really clear but your title completely uninformative, if you go to advanced edit you can change it. If your parents get involved in any way with the new purchase they are taking a risk with their savings. Lenders do not like deposits that come with strings (loans etc.) so you may find the entire plan is a non-starter. In this climate you should be planning how you would cover the mortgage in the event of redundancy, illness or injury, separation or divorce. You haven't mentioned how you are going to cover the costs of selling and buying either?

redstararnie76

Thanks Firefox, I've now changed it.
Sorry, I should have mentioned that we have another £3000 ringfenced for going towards our buying costs - we're hoping to add to this gradually, and any equity in the house will be added to that. We should hopefully have very few selling costs as we will be using the housing association to sell, not an estate agent...

BeccaBell

Are you talking about the Lloyds TSB lend a hand mortgage?

redstararnie76

Hi Becca - I don't actually know, which is part of the problem. My Dad just mentioned 'assuring' the deposit.
I want to go in to Lloyds to find out more, but unfortunately my car has died and I'm on maternity leave, so I'm stuck at home until I can borrow my husband's car. I've tried searching on the net for more information, but I couldn't find anything.
I haven't yet spoken further to my parents because I want to know more first, as I'm concerned that they might downplay the risk that they are taking by getting involved, and I feel that I will get a clearer idea through a third party.

BeccaBell

The lend a hand mortgage is where you only need to put down a 5% deposit and parents put up there savings (savings have to be 20% of homes value) as additional security. They still earn the interest on savings but you benefit from the lower interest rates.

Catch - you have to be a first time buyer to qualify.

There website details the mortgages quite well and their call centre has long hours if you are low on time (which with a new baby I figure you are)

redstararnie76

Thanks Becca - that certainly sounds like it could be that. The bit about the first time buyer sounds like it'll rule us out anyway, but with a name to refer to the scheme, I'll get back on to their website and explore further, then give them a ring.

Fire_Fox

redstararnie76 wrote: »

Thanks Firefox, I've now changed it.
Sorry, I should have mentioned that we have another £3000 ringfenced for going towards our buying costs - we're hoping to add to this gradually, and any equity in the house will be added to that. We should hopefully have very few selling costs as we will be using the housing association to sell, not an estate agent...

I am no expert on shared ownership, only what little I have picked up from this board. BUT my understanding is that some housing associations insist the vendor pays for a professional valuation and their legal fees when you sell, and this can be quite expensive.

redstararnie76

Fire_Fox wrote: »

I am no expert on shared ownership, only what little I have picked up from this board. BUT my understanding is that some housing associations insist the vendor pays for a professional valuation and their legal fees when you sell, and this can be quite expensive.

We had a dummy run last year - put it up for sale before we accepted that we couldn't afford the negative equity (as it was at the time, about £2000) on top of everything else...
We have to have it valued by a chartered surveyor - if we use the one they recommend, it's £175, so it's not too bad. The biggest expense in selling will be our solicitor's fees, which will still not be too bad, so we are anticipating on spending most of that money on expenses for buying our next place.