Shared Ownership Advice

dpr666

brit1234 wrote: »

Sounds like a scam to me. What if you can't get the money to get the 100% staircasing? Your trapped.

I can see why they would want you to buy 100% before you sell as it puts all the risk with you. You buy 100% at their valuation, then you have to get some one stupid enough to pay that amount when there are cheaper properties of the same dimensions/quality out there. In other words you now take 100% of the loses instead of sharing them.


Here is the main shared ownership/equity thread
https://forums.moneysavingexpert.com/discussion/3177256

Thanks Brit1234, finally some constructive criticism!

I can see where your coming from with the 100% thing. After viewing the flat yesterday and speaking to the housing association I now have a clearer understanding of what I'm dealing with.

Basically it is a government scheme to help first time buyers get onto the property ladder. The scheme is called "First Time Buyers Initiative" and is very similar to their other scheme called "homebuy".

Under the scheme the government gives the buyer and equity loan of up to 50% of the property value. This loan is interest free until the end of year 3 when you have to pay 1% interest on what they loaned. then there is an annual rise of 1% capped at 3% at the end of year 5.

With the flat that I am looking at I will pay:

YEARS 1-3 = £150pcm (for ground rent etc)
YEAR 4 = £150pcm + £50pcm (based on 1% of £60k)
YEAR 5 = £150pcm + £100pcm (based on 2%)
YEAR 6 = £150pcm + £150pcm (based on 3%)

These figures are not completely accurate and do not include the mortgage on my 50%, that I have to source myself (contrary to what my friend above thought).

I can sell the property at any time on the open market, but the government must be returned their percentage ownership at the time. Even if prices plummet again I still only have to pay back exactly what percentage they hold at the time of the sale, not the amount that they loaned at the time of the sale.

I have read through the information pack twice myself, shown it to my financial advisor and my solicitor and all consider it to be a valid route onto the property ladder. Especially with just a 5% deposit (£3K!!!!!).

If you want to have a look at the scheme yourself this is the address:

http://www.orbithomebuyagents.co.uk/documents/Publications/FTBi%20buyers%20guide.pdf

MT

brit1234

This is shared equity now and not shared ownership. It brings up its own range of problems including the equity loan time bomb.

Can't you save a deposit instead, you must see prices falling, which makes things easier.

dpr666

brit1234 wrote: »

This is shared equity now and not shared ownership.

I didn't know that they were different? Is it because with the equity loan your not paying a monthly rent, instead you are paying monthly interest?

brit1234 wrote: »

It brings up its own range of problems including the equity loan time bomb.

Could you explain this to me please.

brit1234 wrote: »

Can't you save a deposit instead, you must see prices falling, which makes things easier.

The problem I have is that I cant actually afford to live at home any more. I have to travel 60 miles a day to work using my PCP car and the unreliable train. Then there's the price of my rent. The other day I added up my monthly budgets for living at home and going onto the scheme. On the scheme I am spending £200 a month less than I am now! I have no extra income to save towards a deposit. The only reason I have some now is because I inherited some money. The trains are so often delayed or cancelled that it is affecting my job security.

Because of all these factors I have to move out, get rid of my PCP car and live closer to work. I now consider renting a waste of money so to me this scheme seemed the best option.

I hope you can understand my reasoning.

heathcote123

dpr666 wrote: »

I didn't know that they were different? Is it because with the equity loan your not paying a monthly rent, instead you are paying monthly interest?



Could you explain this to me please.



The problem I have is that I cant actually afford to live at home any more. I have to travel 60 miles a day to work using my PCP car and the unreliable train. Then there's the price of my rent. The other day I added up my monthly budgets for living at home and going onto the scheme. On the scheme I am spending £200 a month less than I am now! I have no extra income to save towards a deposit. The only reason I have some now is because I inherited some money. The trains are so often delayed or cancelled that it is affecting my job security.

Because of all these factors I have to move out, get rid of my PCP car and live closer to work. I now consider renting a waste of money so to me this scheme seemed the best option.

I hope you can understand my reasoning.

Go for it - as you've already noted, the people that moan about it are generally those that have no experience of it. They post a negative thread and pretty much every time, lots of people pop up and say how how well it has worked for them.

It's simply a subsidy from the taxman, free money. If you're ditching the car (cars on loan tendly to be really bad investments!), and have pretty good job security you'd be silly not to

You'll have far better pulling potential than your parent-dwelling mates as welll...

If you go for it, get in the habit of overpaying your mortgage from day 1 - even if it's £50 a month, you'll find yourself in a good position a few years down the line. Oh.. and don't rely on the inheritance.. have your own plan. In 5 years your wages should have gone up enough to make the 3% pocket change.

dpr666

heathcote123 wrote: »

If you go for it, get in the habit of overpaying your mortgage from day 1 - even if it's £50 a month, you'll find yourself in a good position a few years down the line. Oh.. and don't rely on the inheritance.. have your own plan. In 5 years your wages should have gone up enough to make the 3% pocket change.

Thanks heathcote! Brillinat advice, I will definitely try and get into that habit.

I've listened to all the advice over the last few days and I have booked a meeting on monday to reserve the flat. The people that have actually been on the scheme have had nothing but good things to say about it. And whilst I appreciate the feedback I received from the people with negative thoughts, this time I have to listen to the people with the personal experience.

Tonight I have spoken to a mortgage broker and been approved in principle on a great fixed rate 25 year mortgage. I now have to wait until wednesday to hear the results of my credit check. I'm quite nervous about it because I have een refused credit before (uni days). But if that goes OK I will be well on my way to having a foot firmly on the property ladder!

Thanks to everyone!

geoffky

dpr666 wrote: »

also I've reported your abusive comments to the forum admins. Sorry in advance if you lose your account, but you shouldn't be trolling on forums where people are asking for help.

still here..enjoy your slave box..

I am not trolling i am trying to save you from a lot of heartache but you are blind,,get on with it..


1234 This is shared equity now and not shared ownership.
I didn't know that they were different? Is it because with the equity loan your not paying a monthly rent, instead you are paying monthly interest?

you are about to commit financial suicide and still you do not understand the basics...oh dear

heathcote123

geoffky wrote: »

still here..enjoy your slave box..

I am not trolling i am trying to save you from a lot of heartache but you are blind,,get on with it..


1234 This is shared equity now and not shared ownership.
I didn't know that they were different? Is it because with the equity loan your not paying a monthly rent, instead you are paying monthly interest?

you are about to commit financial suicide and still you do not understand the basics...oh dear

Financial suicide is not having a gaff paid off long before you retire.

The sooner you get started the better, even if it's not the perfect situation.

brit1234

heathcote123 wrote: »

Financial suicide is not having a gaff paid off long before you retire.

The sooner you get started the better, even if it's not the perfect situation.

Yes but not with either a shared equity or ownership property, they are for the financially illiterate and builders benefit only.

Buy normal, if you can't afford to cut back on spending and save.

heathcote123

brit1234 wrote: »

Yes but not with either a shared equity or ownership property, they are for the financially illiterate and builders benefit only.

Buy normal, if you can't afford to cut back on spending and save.

So the financially illiterate turn down free money?

Really mate, get over it. Your in danger of becoming a bruno.

gizmo1234

My house has been on the market for a year and half, ive sold it 4 times! Because its shared ownership the buyer has to be accepted by the housing asssociation and everytime they get to the interview stage they get declined due to not having enough money left a month after all their outgoings.
What seems hard to grasp is all thes people have seen fiancial advisors at the start of the process and been told they fifnancially have more than enough money to go for my house and there will be no probs getting accepted, but they never do! The last lady that got refused worked full time and had a substancial amount of cash savings and she still got refused.
Im litterally getting ill over it all, im getting made redundant soon as well and seem to keep hitting a wall with the housing association. Is there any way I can challenge them to stop this happening? or legally can i do anything? im feeling like im never going to sell it because they are making impossible for anyone to fit their criteria and they advertise it as affordable homes! I just dont see who would be able to go for it, maybe someone with a recent lottery win!!!