Shared Equity Am i missing something??

GDB2222

tankie5753 wrote: »

Its not a bond, its a £45000 golden hand shake for 22 years service in the army, thought it would be easier to explain it as a bond so i have no access to it untill 2019, at the moment im paying rent and just see it as dead money which is really frustrating me and it would take at least 2 more years to square away even a 10% deposit on the open market

I can see where you got your user name from. Rent is dead money, but so are mortgage payments unless you can see some house price growth. Who knows whether you will, but these SO properties tend to be well over-priced.

cabbage

poppysarah wrote: »

Might not be able to remortgage even if his wage has gone up unless the price is at least the same as now.

Hope he can save hard.

Yes, you're right there!

moneybunny123

I bought a house a few years ago on a shared equity scheme (the builders own 25%). Whilst it DID enable me to buy a much larger and nicer house than I would have otherwise been able to afford, the biggest downside has been when wanting to sell. The builders insist on you paying for two (or even three) surveyors to value the propery (which obviously cost money - whereas an Estate Agent does it for free) and the builders then want you to sell for the average of those valuations. Well, we all know that there is a HUGE difference between what a house is "valued" at, and what someone else is prepared to pay.

I also had problems when trying to remortgage as I was contractually obliged to use the Halifax and only the Halifax (meaning higher interest rates than alot of other rates available on the high street).

As it happens, the value of my house has decreased since buying and when I sell (as I hope to in the next few months), I will getting out less equity than I paid in. However, so will the builders.

It's swings and roundabouts. The biggest negative for me has always been the added burden of not only knowing I have a mortgage, but that I also have a substantial lump sum to repay the builders after 10 years.

Muhasib

GDB2222 wrote: »

I can see where you got your user name from. Rent is dead money, but so are mortgage payments unless you can see some house price growth. Who knows whether you will, but these SO properties tend to be well over-priced.

I see a few of these comments about Shared Ownership being 'well overpriced' - how does this stack up when the surveyor goes in to do the valuation for the mortgage lender? won't they value at the correct level for that area, would the builder get away with the property being 'well overpriced' with the scrutiny the lender's surveyor will be required to exercise.

GDB2222

I think that the builder's percentage is subordinated to the lender's loan. In other words, the lenders have security over 100% of the value but are only lending 80% say.

serious_saver

moneybunny123 wrote: »

I bought a house a few years ago on a shared equity scheme (the builders own 25%). Whilst it DID enable me to buy a much larger and nicer house than I would have otherwise been able to afford, the biggest downside has been when wanting to sell. The builders insist on you paying for two (or even three) surveyors to value the propery (which obviously cost money - whereas an Estate Agent does it for free) and the builders then want you to sell for the average of those valuations. Well, we all know that there is a HUGE difference between what a house is "valued" at, and what someone else is prepared to pay.

I also had problems when trying to remortgage as I was contractually obliged to use the Halifax and only the Halifax (meaning higher interest rates than alot of other rates available on the high street).

As it happens, the value of my house has decreased since buying and when I sell (as I hope to in the next few months), I will getting out less equity than I paid in. However, so will the builders.

It's swings and roundabouts. The biggest negative for me has always been the added burden of not only knowing I have a mortgage, but that I also have a substantial lump sum to repay the builders after 10 years.

I've looked at a few of these schemes and it's interesting to hear from someone who has done it and is coming out the other side. Thanks!

moneybunny123

serious_saver wrote: »

I've looked at a few of these schemes and it's interesting to hear from someone who has done it and is coming out the other side. Thanks!

Coming out the other side a lot poorer but a lot wiser. Like lots of things in life, I suppose?!

If I was asked to give my honest opinion on whether to go for a shared equity, I'd always say no.

kiki*_2

Hi we looked at doing this but decided against it mainly because there are only a small handful of banks willing to give a mortgage in this situation so saying you wanted to swap mortgage providers in 5yrs u can't! They were also clearly bumping the house price up to compensate. Instead we got a 95% mortgage on a much nicer house!

Muhasib

moneybunny123 wrote: »

Coming out the other side a lot poorer but a lot wiser. Like lots of things in life, I suppose?!

If I was asked to give my honest opinion on whether to go for a shared equity, I'd always say no.

But they are 25% less poor after the sale due to the builders equity stake so the shared equity scheme benefitted them in this case.