Shared Equity Taylor Wimpey £119,995 flat

rh203

Hi, I'm new here but have a question about Shared Equity (NOT SHARED OWNERSHIP).

I have signed today for a shared equity deal with Taylor Wimpey for a two bedroom flat located on the Staithes riverbank in Gateshead. To cut a long story short, Taylor Wimpey offer a 15% deposit in the form of a 0% interest loan which lasts for 10 years and then needs to be paid back or paid back if the home is sold before the 10 years. The buyer then needs to find another 5% to build up the 20% deposit (£6,000). My starting salary at a graduate job will be £21,500 but rises on a steep pay curve for the first 3 years or so.

The calculations for the flat can be seen below:

Flat Cost £119,995

15% 0% interest 10 year loan £17,999.99
5% contribution £5,999.75
Mortgage £95,995.26

I'm basically interested what people think of the deal and I've done the sums and I'm obviously going to be quite stretched for the first year or so. The broker linked to the development has confirmed I should be able to access a maximum of £97k in mortgage with repayments of £504 per month based on a 40 year period. As I haven't met with the broker yet, I'm not sure what deal it is but it was with HBOS and my calculations suggest the initial rate would be 5.67% (don't know if it's fixed or not yet) and carried a 4 year product life.

Anyone done anything similar or have any advice or opinions for a first time buyer?

Thanks,

dimbo61

OMG a 40 year mortgage!!!!
What happens if you need to move to another part of the country in 2/3 years?
Where are you living now?
Its a nice idea to own a place of your own BUT shared equity and a 0% loan over 10 years!
Student loans by any chance as well?
Let me guess a 2 year fix at 5.5% then anything can happen and you will have paid nothing off the mortgage balance.
Live at home with Mum and Dad or rent cheaply until you have a 10/15% deposit

poppy10_2

At almost 5x your current income, you'll have a very limited choice of mortgage providers who will be interested, which will leave you facing higher costs. The 5.67 % interest rate is hideous, plus the 40 year term is a killer - you'll pay thousands of pounds of extra interest over the term. Plus, as you are just starting out in your career, what happens if/when you need to move away - with only 5% equity in the home, you could easily end up in negative equity with only minor falls in house prices, leaving you stuck and unable to move.

rh203

hi, okay to be clear here I have put down a holding deposit only on the proviso that if there isn't any suitable mortgage deals I get it back, so I'm not in a particularly bad position..

As far as the 40 year term, as I stated, he made this based on an initial quick check just to see if I would even be eligible over the phone. But..as the product is a 4 year one, wouldn't I have the chance to change after the 4 years is up to a shorter term?

If I decide to move, I was going to look to rent out the property as and when that came about but because of the nature of the company I'm with..it's not likely unless I want to.

Also, my Girlfriend may yet be coming onto the mortgage with me so I'm really looking for pointers...

Pensions

We thought about that deal but decided against it. A few builders are doing 5% match schemes and the quote we got was 5.23% at 90% ltv. Still high rate but with hardly any deposit it's no surprise, though at least you don't have to pay back the builder's loan. Obv the affordability calcs will be higher but if your gf is coming in too that may sort it.

poppy10_2

rh203 wrote: »

But..as the product is a 4 year one, wouldn't I have the chance to change after the 4 years is up to a shorter term?

When you shorten the term your monthly repayments will go up, to around £610 per month for a 25 year term assuming the same interest rate. Plus you will be remortgaging, and if the house value has gone down (or even if it has remained the same) you won't find another mortgage lender willing to touch you.

rh203

If it was at 5.23% for example, would that mean that if I were to take out the 4 year product, would it mean that I am only paying for the interest over that period and wouldn't even make a dent in the actual loan itself?

ankspon

DO NOT BUY!I own a flat built by them and it is the worst case of soundproofing i have ever had,you will regret it.

rh203

I highly doubt I'm going to get a decent deal to be honest so I'm more than likely going to just ask for the holding deposit back.

SouthCoast

Read these forums to find the shared ownership/equity horror stories where the value of the property has dropped below the purchase price.

rh203

I have looked at them, but is that not relative to the location / property / developer etc?