Shared Equity Taylor Wimpey £119,995 flat

BadgerFace_2

rh203 wrote: »

Yes but it would release me from having to only use shared equity mortgages and give access to all standard mortgage products across the board.

With shared equity you still have access to the exact same rates as anyone else, but your choice of lender is restricted, mainly to Halifax & Nationwide. Though they do offer some pretty decent rates anyway.

If you paid off the builder, you would have an 80% LTV mortgage with choice, but if you paid that 15% off the mortgage, you would have a 65% LTV mortgage with less choice of lender. Make up your own mind which one has the better rates.

wymondham raises a fair point about the builder having to offer incentives, which is to a degree valid. However, to counter argue that, the scheme was mainly designed to get around the much higher deposits required to obtain a mortgage over the past few years. This was never necessary pre-recession, as mortgages were readily available.

It makes me question peoples motives when they come to a MONEY SAVING WEBSITE and advise people against something which could, if used correctly, save them a lot of money.

Burridge60

New Builds come with a premium. You don't expect to buy a new car have it delivered and be able to sell it for what you paid for it. So you shouldn't expect this with a property. This has been the case for many years. Developers have in recent years sold "off plan" to investors below market price by around 15% or more in some cases.

New homes have a kudos factor that you pay for.

The most fundamental issue is your ability to buy the equity from the builder in ten years time. You might think that this gives you ample time for you to save enough money, for the property to go up in value or for you to inherit enough to cover it. Oh forgot the lottery win the most likely of all!

In reality our lives change. In ten years you could go from a single person with a substantial excess of income over expenses to a committed partner to another person with a few children. If your flat wont sell then you are stuck with it. Stuck also with the need to buy out the Builder.

Just read the threads on here. "We did interest only to get started and were going to change then got married, had a child, lost our job, went abroad".

poppy10_2

BadgerFace wrote: »

With shared equity you still have access to the exact same rates as anyone else.

Hardly. With Halifax, for example, the cheapest two year fix for a shared equity mortgage is 5.19%, woth a £499 fee, compared to 4.39% and no fee for a standard FTB mortgage with the same LTV. Not to mention there's really only Haliwide that offer shared equity mortgages, so you wouldn't be able to take advantage of cheaper rates from other lenders when it comes to remortgaging at the end of the fixed rate period.

BadgerFace_2

poppy10 wrote: »

Hardly. With Halifax, for example, the cheapest two year fix for a shared equity mortgage is 5.19%, woth a £499 fee, compared to 4.39% and no fee for a standard FTB mortgage with the same LTV. Not to mention there's really only Haliwide that offer shared equity mortgages, so you wouldn't be able to take advantage of cheaper rates from other lenders when it comes to remortgaging at the end of the fixed rate period.

I take it you found that on the 'intermediaries' website. That applies to key worker schemes, shared ownership and other 'affordable housing' schemes, not to builder retained equity schemes, where you can apply for any product within your LTV bracket.

Edit: I've re-read their stuff and it fails to mention this anywhere, so may have changed recently. Nationwide still allow any product though.

TrickyDicky101

Flats are naturally restricted to general rises in property values (and supply/demand effects) as you can't really 'improve' them (you can't extend them for example) so buying them in expectation of future price rises should be entered into with careful consideration. That's one heck of a big mortgage you are looking at taking - a 40yr term means you will barely have paid any capital off after 5 years. It would make more sense (to me) to move your girlfriend in to begin with and use the additional income to take a 25 yr term.

Shared equity artificially boosts the sales price of the new build property. Add a property market which looks to me anyway like it is at best going to stay at its current level and at worst go down, I wouldn't touch such a deal with a 40 foot pole.

rh203

Hi all,

Thanks for the advice on here. I've been in touch with a friend who owns a well established independent mortgage advisory who has heavily advised me against going for the deal. One of the main reasons is that Taylor Wimpey are forcing me to use the single broker who provide only two lenders, whereas he has explained that there are actually a whole host of lenders who would be prepared to loan on the amount on a shared equity basis. Also, the price of new builds is obviously not certain in the current climate and to be honest, I feel that £120k for the property is over the top as it is. I'm basically going to hit the sales advisor with what I think and see if she can come up with some mad reduction in price (99% certain she won't) and if not, cancel the reservation and get my deposit back as agreed on the basis I can't get an agreeable deal from the broker.

My plan now is to save a small amount for a deposit and take a mortgage for around £45k, pay off the amount heavily over a short term (maybe 5 years depending on the price). This would allow me to pay into equity rather than interest, gain a lower interest rate and eventually either own outright, rent out, or sell the property to use as a deposit on a higher valued property.

rh203

Burridge60 wrote: »

The most fundamental issue is your ability to buy the equity from the builder in ten years time. You might think that this gives you ample time for you to save enough money, for the property to go up in value or for you to inherit enough to cover it. Oh forgot the lottery win the most likely of all!
.

Bit of a stupid thing to say as a blanket statement really as I happen to be in a very different situation to anything you're talking about there...And I should expect that a lot of people have certain circumstances that are nothing like what you have said.

BadgerFace_2

rh203 wrote: »

Bit of a stupid thing to say as a blanket statement really as I happen to be in a very different situation to anything you're talking about there...And I should expect that a lot of people have certain circumstances that are nothing like what you have said.

The thing is, a lot of companies openly advertise shared equity as being a way to buy a property that they couldn't otherwise afford and they (the builders) know have no chance of being able to repay, bar a house price increase. I'm pretty sure this is why most people on here don't like it.

Burridge60

rh203 wrote: »

If after the two year period was up, I were to pay off the 15% loan on the property, this would mean that I would have a good lump of equity in the house that I can call my own and would also be untied from having to use the shared equity mortgages available and could use any product on the market that best suited.

Presupposes the flat has increased in value and not gone down like a lot of MSE posters have reported who bought shared equity properties.

We are talking new build and they don't tend to re sell after purchase for their purchased value.

This is why most lenders only lend very reduced amounts on new build flats. It is higher for new build houses.

EDIT Is this a house or flat I am confused now!

Unless they are shared equity when a special scheme has been introduced to make them saleable.

Check who the managing agents and Freeholders are owned by and who constitutes the company. Possibly the Developer. How are management fees charged and calculated what have they undertaken to do.

No one here is nit picking but you are giving us the rose coloured spectacles replies.

They want your money we want to stop you losing it!

rh203

Burridge60 wrote: »

Presupposes the flat has increased in value and not gone down like a lot of MSE posters have reported who bought shared equity properties.

We are talking new build and they don't tend to re sell after purchase for their purchased value.

This is why most lenders only lend very reduced amounts on new build flats. It is higher for new build houses.

EDIT Is this a house or flat I am confused now!

Unless they are shared equity when a special scheme has been introduced to make them saleable.

Check who the managing agents and Freeholders are owned by and who constitutes the company. Possibly the Developer. How are management fees charged and calculated what have they undertaken to do.

No one here is nit picking but you are giving us the rose coloured spectacles replies.

They want your money we want to stop you losing it!

Understood,

I've called the agent today and basically told them what my mortgage advisor friend has said, the fact that I'm stuck with a 5.67 rate mortgage, being forced to use one particular broker and am potentially going to be extremely limited when it comes to re mortgaging in 4 years time due to being forced to use shared equity ones only. She went very quiet and said shed call me back in a few hours but I'm not going to go through with it and just get my deposit back as per the terms and conditions.

Thanks for the help,
Ryan