shared ownership?dnt understand help!

mariagti

me and my boyfriend r looking to but cant get a big enuff mortage for a flat around my area.so we're looking at shared ownership say im paying a £50,000 mortage on it and i have to pay £500 mortage a month and £178 a month rent and £16 service charge a week. how is that a good deal for us? i could aford the mortage but not the rent aswell its too much.

and once youve finished paying your half and then you can buy the 2nd half but then is the house yours or do they still own it?

help please!

magyar

Have a read of this

And this. In fact just put "shared ownership" into Google.

For a start, if you're getting a £50,000 mortgage then the repayments will be more like £300 depending on the length of the mortgage. As to whether you can buy more of your house, it depends on the deal in question, it would appear.

And the answer to your question is that it's not as good a deal as buying yourself, it's designed to be a workable way of people gaining equity in a house. So if you're paying £500 a month into a shared ownership scheme then about £50 of that is going directly into your house.

slmcgove

Shared ownership does work out less than buying outright.

If you bought the same house at £100,000 working on your estimate that a 50% share would be £500 in mortgage payments a month(which is more likely £300 on a 5.5%, 25 year mortgage) then your mortgage for the full 100% if you bought outright would be £600 a month and you would still have to pay the service charge if you owned outright.

Therfore paying £170 rent a month would be £130 less than buying outright.

You would be charged a rent as most housing associations have an interest only loan on the properties they bought, which is why they charge a small rent to cover this.

Also there is an eligibility element to shared ownership, if you could get the £100,000 mortgage then you would not be eligible for shared ownership as you can buy outright.

magyar

Slmcgove, I'm not sure I follow you. If you pay a £50k mortgage off over 25 years at 5.5% you'll end up paying £95k in repayments, plus (if this is a typical figure) the rent at £178/month adds a further £55k so you end up paying £150k and end up with £50k equity.

If you just pay off a £100k mortgage at 5.5% you'll end up paying £188k, but have a full £100k equity.

So it costs you £38k more over 25 years, but you end up £50k better off.

I'm not saying this doesn't make shared ownership a better idea than renting, of course.