75/25 Shared Equity Taylor Wimpey

heji33

What is the optimal repayment option to repay a 25percent share Taylor Wimpey have on my house worth £196,000.
From day one they own £49,000 and I have 10 years to repay them back but as the years pass, the value of the house will go up and therefore the repayment will be greater. eg if the house is worth £250,000 in five years time I'll owe them £62,500.
At what point should I add it too the Mortgage? Is that a less expensive option?
Any Ideas would be greatly appreciated. I don't want taylor wimpey to get loads of profit out of this.

dmg24

Why do you assume that the value of the property will increase? That is a dangerous assumption.

BugsyBrowne

dmg24 wrote: »

Why do you assume that the value of the property will increase? That is a dangerous assumption.

Very dangerous assumption my house was £172k when new its now worth £160k
£12k loss in 3 years.

heji33

star-fire wrote: »

Very dangerous assumption my house was £172k when new its now worth £160k
£12k loss in 3 years.

Well If it decreases, Maybe Ill owe them less back

CLAPTON

heji33 wrote: »

Well If it decreases, Maybe Ill owe them less back

when did you buy it
surely it's already worth less

izools

Surely you agree to buy 25% for a fixed price - in this instance - £49,000.

So whatever the value of the house, your original purchase price stands, so once you've paid up the £49,000, you own 25%, no matter what 25% is, be it £35,000 or £65,000?

If you buy a house on a 90% mortgage and the value goes up or down, the mortgage loan amount doesn't vary in line with this - it is the same for a share.

You owe the bank £49,000 over the mortgage term. That is fixed, it does not change.
You own 25% of the property, no matter how much 25% is worth. That is fixed, it does not change.

[Deleted User]

why not save the max allowed in an ISA,around £5300 a year,earn tax free interest and prob have enough to pay them off in 8 years at todays price

dmg24

izools wrote: »

Surely you agree to buy 25% for a fixed price - in this instance - £49,000.

So whatever the value of the house, your original purchase price stands, so once you've paid up the £49,000, you own 25%, no matter what 25% is, be it £35,000 or £65,000?

If you buy a house on a 90% mortgage and the value goes up or down, the mortgage loan amount doesn't vary in line with this - it is the same for a share.

You owe the bank £49,000 over the mortgage term. That is fixed, it does not change.
You own 25% of the property, no matter how much 25% is worth. That is fixed, it does not change.

That is not correct, the OP does not owe the bank they owe the property developer. The property developer owns a percentage share of the house, that is what needs to be repaid.

ironlady2022

Agree with dmg24, property developer owns a perecentage. We looked at this before and decided against it. Basically the amount of 25% is repayable on the 10th anniversary, so I suggest you start saving as much as possible now so you can remortgage at a nearer date for less or remortgage for the amount needed to pay them back nearer the time.

lisyloo

Well If it decreases, Maybe Ill owe them less back

You need to check it out but we did this (admittedly 1991) but the minimum was 25% of the purchase price.

If mortgage rates are less then the propery gain then you should borrow the money on a mortgage if you can.
If moretgage rates are more than the property gain then you should wait for as long as possible (providing it's not costing you anything).

Personally I think with the public sector cuts on the way prices are likely to fall.

As an anecdote, our house in 1991 went down from £70K to about £45K in 1997.
We had saved the money after 4 years and asked the builders for a discount to pay off a year early.
They offered us a 9% discount.
This was better than savings rates at the time, so we accepted their offer and paid it off early.
Lots of people got into trouble when they needed to move e.g. job relocation, but didn't have the money and couldn't re-mortgage.