Shared Equity/

mustrum_ridcully

This is a good article about the pitfalls of Shared EQUITY. These people were a "poster couple" for a shared equity scheme from Bellway homes. Price of their flat fell now they can't sell because they can't get enough money to pay-off the mortgage and Bellway homes.

http://www.walesonline.co.uk/cardiffonline/cardiff-news/2011/03/24/couple-s-bellway-property-dream-now-a-nightmare-91466-28393030/

Orpheo

Shared equity is a scam.

Graham_Devon

lvm wrote: »

This is INCORRECT.

Shared Equity is where you pay for 50% and sign some sort of loan agreement (usually with the builder) agreeing to pay him 50% of the sale value, whether this is less or more that the original price.

When you do sell a Shared Equity property, this is just like selling any other property where anyone can purchase the full 100%.

What most people are more familiar with and what Emmzi refers to is Shared Ownership where you own 25/50/75% of the property and pay rent on the remaining %. This, in my opinion, has many more cons. As far as I'm aware when it comes to selling, you need to find a buyer who fits the criteria to purchase a Shared Ownership home.

Hope that helps.

P.s definitely correct - I live in a Shared Equity property.

Are you kidding?

Shared Ownership has its cons, but shared equity is often worse, and a simple response to the lack of 100%+ mortgages availiable.

With shared ownership you have 2 parties involved. You, and the shared ownership scheme.

With shared equity, you are now going to have the government, the builder, and yourself all involved, plus a countdown to paying off a loan which will start accruing interest.

There are already people coming up with the wonderful suggesting of having 4 parties involved....yourself, the builder, the government AND your parents....and all this is so that the government and builder can walk away scot free and you and your parents bear all problems.

We shouldn't need either scheme really.

Ambro

mustrum_ridcully wrote: »

This is a good article about the pitfalls of Shared EQUITY. These people were a "poster couple" for a shared equity scheme from Bellway homes. Price of their flat fell now they can't sell because they can't get enough money to pay-off the mortgage and Bellway homes.

It looks to me that if they had purchased this property without the shared equity they would be in a significantly worse position. They would now owe at least an extra £19k, higher mortgage payments and no sob story to sell to the papers.

The problem appears to be that they had no savings or plan representative of the additional loan amount, they were not overpaying their mortgage to ensure they were covered at the end of the loan term or when interest began to accrue on it.

If you go into a loan scheme to purchase anything (not just property) then you have to ensure you can pay back the loan amount. Would people still be crying foul if this was someone racking up £19k of debt on 0% credit cards and then getting stung for large amounts of interest when the 0% period ended because they had made no plans to repay the money?

dtaylor84

They bought a property, the value fell and they are now in negative equity.

The shared equity scheme means that Bellway homes have lost some of the money, so they are actually better off than they would have been had they got a mortgage for the full amount.

poppysarah

dtaylor84 wrote: »

They bought a property, the value fell and they are now in negative equity.

The shared equity scheme means that Bellway homes have lost some of the money, so they are actually better off than they would have been had they got a mortgage for the full amount.

The point being presumably they were sold a wonky donky to start with.

One bed flat for a couple. Silly idea.
How much could they realisticly afford? They probably pushed themselves to afford the share they bought and 2004 was when house prices were going up like mad. Some people believed they could go on forever increasing.

If they'd have only been able to afford X amount mortgage then it made sense for them to buy 100% of a property for that amount.

The lax easy credit that crunched got them there and the banks are still going to be squealing about the problems the debts cause them for a long time.

Saying they could be in more debt is silly - they couldn't - they maxed out their outgoings on a mortgage someone should have advised them against.

If they hadn't maxed out then in the last 7 years they could have made considerably overpayments of the mortgage or saved towards paying off the extra amount.

mustrum_ridcully

Ah, so instead of assuming they'd have gone for a 'cheaper' flat with the mortgage they had (i.e. a £109k one) we'll assume that they'll have gone for a bigger mortgage... :whistle:

Did a quick google, found the postcode for these flats and did a check on nethouseprices, and guess what flats back in 2004 were being sold for less than £110k.

So what's the betting they told the salesperson they could get/afford a £110k mortgage and were told "well with this great deal we give you a 25% discount that you pay back when you sell and as any intelligent couple knows house prices only ever go up so it's win-win" or something along those lines?