Shared Ownership

bigjonstuff

Hi Folks,

My partner and I have been in a scheme for shared ownership for some time and following on from our first 'selection' of a property to view have since been to get our mortgage arranged.

We therefore as a first step went to our personal account providers - HBOS. Due to the scheme they have separate T&Cs and after a lot of confusion they determined that they require a 25% deposit of the share we are purchasing!

Thus, in our situation, the property costs 160k and we are able to purchase from 25-75%.

However the idea in us doing this is to obviously avoid paying a 15% deposit on 160k that we do not have.

15% of a 25% share of 160k would be 6k - a lot more reasonable to us than 15% of 160k (24k).

Therefore we are assuming - and away to do the leg work in finding out - if there are lenders who offer realistic deposit rates 10-15% for 'Shared Ownership' mortgages.

However - if anyone is aware of this being common practise or of and banks that DO indeed offer the more appealing rates then we would greatly appreciate your advice and assistance!!

Cheers
Jon

PasturesNew

I don't know who they are, the information's dotted around this site somewhere, but there are only a small handful of lenders who regularly lend on SO properties. For a lender who doesn't do them on a regular basis you're going to get their standard offerings, which isn't what you're looking for. Somebody's bound to come up with a list of who does them soon.

What you need to do is find a "whole of market" mortgage advisor, who can tap into most companies and most deals, they'll know who's best for your situation.

I haven't got the energy right now to tell you my opinion on why SO properties aren't the best thing for many people to go after... others will, no doubt, shortly.

Richard_Webster

15% of a 25% share of 160k would be 6k - a lot more reasonable to us than 15% of 160k (24k).

You would only then be buying a 25% share so what has 15% of £160K got to do with the price of bread?

Until recently it was the case that a number of lenders would lend 100% of the percentage that you were buying, but these may now not be available or much harder to find.

SO leases contain a"mortgagee protection clause" that essentially means that if you default on the mortgage the lender can buy in the remaining percentage for the difference between the amount owed on the mortgage and the then value, so if prices have gone down, the lender doesn't lose out, the HA does. E.g if you were able to borrow £40K on a 25% share and the value of the 100% dropped to £120K from £160K then it would still cost you 75% of £120K (£90K) to buy the remaining percentage, but your lender could buy it in for £120K-£40K = £80K and then immediately sell the 100% on the open market.

Because of these clauses there is not so much risk for a lender in giving 100% mortgagee on SO properties - but in the present market they are still being very careful.

bigjonstuff

Richard_Webster wrote: »

You would only then be buying a 25% share so what has 15% of £160K got to do with the price of bread?

The idea was to indicate our willingness to only be looking toward a 15% share of 25% not a 15% share of 100% which would be out of our current affordability, the price of bread is indeed nothing to do with this - THANKS.

Anyway... cheers for the advice - I will continue to pursue in my best interestes!

bigjonstuff