Shared Ownership - I don't understand please help!

davard71

Hi all

I apologise if there is already a thread on this elsewhere but I am somewhat confused.

I have a shared ownership property of which I own 75% outright and I rent the other 25% from the Shared Ownership company. The house was valued at £112,500 back in 2002 and I raised a mortgage for the 75% of that price (£87,000)

I am now selling the property on the open market as they have been unable to find me a buyer, and it has been valued at £135,000. Now this is where I am confused.

If I sell the property at its current value, £135,000 and I owe £77,000 on the mortgage I originally took out, that would leave me (by my reckoning) with approximately £58,000 of which I would have to pay the company 25% of this, £14,500. Does that sound about right? Obviously I have fees etc to pay from the proceeds but I reckon I should walk away with about 35k.

I don't know if that sounds right and I can't seem to get anyone to give me a straight answer, so any help would be much appreciated.

Regards

Davard71

Alter_ego

I think you pay them 25% of the value, not of the equity.
After all they own 25% of the house

p00hsticks

davard71 wrote: »

If I sell the property at its current value, £135,000 and I owe £77,000 on the mortgage I originally took out, that would leave me (by my reckoning) with approximately £58,000 of which I would have to pay the company 25% of this, £14,500. Does that sound about right?

No, it doesn't sound right. At it;s simplest, if you own 75% and they own 25% then if you sell it for £135,00 then you get 75% of that (£101,250) and they'll get 25% (£33,750).

You then settle the mortgage out of your share.

Obviously this is going to depend on the exact details of the contract you signed with the association.....

aka_shortie

p00hsticks wrote: »

No, it doesn't sound right. At it;s simplest, if you own 75% and they own 25% then if you sell it for £135,00 then you get 75% of that (£101,250) and they'll get 25% (£33,750).

You then settle the mortgage out of your share.

Obviously this is going to depend on the exact details of the contract you signed with the association.....

I second that, they own 25% of the sale price

First_Time_Buyer_Guru

I agree. They make money on any capital gain in the property.

PasturesNew

davard71 wrote: »

I own 75% outright
I rent the other 25% from the Shared Ownership company.
house was valued at £112,500 back in 2002
I raised a mortgage for the 75% of that price (£87,000)

I am now selling ...it has been valued at £135,000.

£135,000 - sell the house for
£101,250 - your money
£33,750 - their money


With £101,250 in your pocket:
£77,000 - repay current mortgage
£24,250 - in your pocket.

Then you have to pay the EA fees, VAT, solicitor, VAT, removals, etc.

poppysarah

What does the paperwork say when you bought it?

kingstreet

Woah there!

You are selling your 75%. You are not selling the Housing Association's share. The only way you can do that is to offer to "staircase" upto 100% at completion, then you'll be effectively selling the whole property.

If the property is worth £135,000 and you own 75% of that, you are selling your share for an asking price of £101,250. Your buyer will be buying your share and will be making rental payments to the Housing Association as you do now.

On the equity issue, if you sell for £101,250 and have £77,000 left on your mortgage, you'll have £24,250 left from which you'll pay your fees and take your "profit".