Shared Ownership help!!!

timbo86

Hi guys

Me and the other half are thinking of getting a shared ownership house in August. Confirmed to the estate agent that we were interested today. Anyway just a few questions do we have to find our own mortgage of 55,000 or does the estate agent offer us a deal. The reason why i ask is i was on the phone to the estate agent and they said a financial advisor will be on th phone to me in due course just wondered what all that was about.
Also we have 55,000 mortgage what rough price per month would that be im guessing around 300 per month.
Any general advice on shared ownership would be great.
Thanks

cattie

With a shared ownership mortgage you don't have the same choice of lenders as with a standard mortgage, but it may still pay you to check with a whole of market financial advisor should the one from the estate agents being a 'tied' advisor. A tied advisor won't have access to all of the mortgages available, so may not come up with the best deal for you.

As you will gather, it's up to you to sort out your mortgage & really it's best if you have a mortgage offer in principle before you even put an offer in on a property as it makes the whole process much quicker.

timbo86

Bit confused with the shared ownership mortgage thing i thought you just looked at various mortgages yourself and for example i want one for 55,000 thats what i look for. Also from what you was saying it sounds like the estate agent will offer us a mortgage although not necessarily the best deal would you say thats a fair some up

izoomzoom

Hiya

Welcome to SO purchasing.

The thing with EA mortgage advisors is that they are generally limited in what they can offer. As others have said, best advise is to find a whole of market fees free mortgage advisor who will be able to search the entire market for you and present you with a few options.

Unfortunately SO is not like main stream, in that there are not tonnes of SO mortgages. You improve your options if you are able to have a 5% or even better 10% deposit (and if you are only purchasing in August) you have time to save save save.

You will also need to appoint a solicitor and I recommend you try and find a sol who has experience with SO.

Finally, I understand that SO are occassionally sold on the open market (you are dealing with an EA), but do you know who the Housing Association is, and has the HA (not EA) accepted / offerred property to you, in writing ?

timbo86

No we havn't recieved any letter of confirmation yet as we have only been provisionally accepted. I just want to get my head round all this as there is alot to take in and i know everyone on here is very helpful so i thought what better place to come.
Sooooo as i was saying any advice for a newbie starting out gratefully recieved.
We was thinking though of having a 100% mortgage for the 55,000 required as we dont have massive savings and with it being a new build will need alot of stuff e.g carpets and such like.
I was thinking of accounting 1000 for solicters fees roughly does that sound about right?

indiegirl_2

I might be able to help you out here as well as I bought a brand-new-build SO flat last January.

I applied directly to the Housing Association (HA) in December 2004. In Feb 2005 I was offered the chance to reserve a flat in the development I'm in.

At this point I researched mortgages. Yes your Estate Agent may offer a mortgage broker - you can opt to sit down and chat with them but you will be under no obligation to use their recommendations.

It is worthwhile talking to them though. Only a few lenders will offer on SO properties - it's not a case of walking into any old bank and saying "I want a mortgage for £55k". What you have to remember is that you are only buying half (or less) of the amount of the property, and some banks don't want to get involved with a legal wrangle with the HA if you default and get repossessed. Thus, only a few on the high street will lend on SO, and even then, only on a certain percentage upwards of SO.

Let's take Nationwide as an example. Before I reserved my flat I looked at another flat at 30% share. When I spoke to Nationwide, they told me that they will only lend on 40% shares and upwards. You don't mention what percentage you are buying but this will have an effect on how many mortgages are available to you.

On top of this having a deposit is better than not - again, if you have some money to put down, you will have more choice of mortgages; again the banks want to minimise the risk when lending on an SO property. That said, SO is becoming more popular with the market as it is at the moment, so perhaps in the two years since I investigated, there are more lenders available.

You say you have £1000 for solicitor's fees - you will at some point have to choose a solicitor and only then will you be able to get an idea of how much this will cost. Shared Ownership can be a little more expensive to buy and sell because there is more legal work involved; I recollect my solicitor's fees being about £1400 and that wasn't including Stamp Duty. You should ask anyone you know in your area who has bought SO before if they would recommend their solicitor - and you will need to ring around solicitors asking for quotes for the purchase of the property (quotes are free and you will be under no obligation to use them). Only by doing that will you get an idea of exactly how much you will need to put aside for Solicitors.

Stamp Duty is something else you will need to consider - it is possible, because you are buying under the threshold, to not have to pay Stamp Duty. You will have to ask your solicitor about that. There are various rules about whether you pay none, half or all of the Stamp Duty on the property at the time of purchase.

You are right in that you will probably need to pay out for carpets, and if the kitchen is barebones - you will possibly need appliances as well. My sister purchased a new build SO house and had to put an oven in as well as the normal kitchen appliances, and also had to pay out to floor the entire house. I was lucky in that I had a built-in oven in mine but still had to carpet/floor the entire flat.

As new builds can be delayed, be prepared to wait if it is! My build was 9 months late on completion, but the upside was that I managed to save a whole lot more money as a result.

I can't think of anything else off of the top of my head, if you have any more questions I'll do my best to answer them. I'm just in process of selling my flat now so I'm going through it all from the other side!

Bargain_Rzl

timbo86 wrote:

Also we have 55,000 mortgage what rough price per month would that be im guessing around 300 per month.

Probably slightly more, especially if it is a 100% mortgage (as you won't have access to the best interest rates).

I bought 40% (£58k) of a £145k flat. I had a £7k deposit so my mortgage is £51k. I'm with Nationwide on a 4.89% 2-year fix (offered prior to the last 2 BOE base rate rises!) and my mortgage outgoings are £298.92 per month of which about £4 a month is the product fee.

You are borrowing slightly more and TBH I think you'd be unlikely to get a fixed rate under 5% now, especially with no deposit.

timbo86

Thanks for that guys i have arranged a meeting with the estate agents mortgage advisor a week on monday so will see what they have to say. Been assured that the 1st time is free!!!
Will have to ask around with mortgages and see what i can get!

newmum1

My home is shared ownership it cost £60,000 and per month i pay £350 mortgage and £155 rent. My mortgage is with halifax and fixed for five years, my solicotr was part of their offer so i did have to pay but once the sale went through that was refunded to me. It is worth having a good deposit though i had £3,400 i guess it shows that you are willing to put your money forward.

robwend

can i hi jack thread a min and ask if you buy a shared owndership and the half required you give in full can you get the rent covered by housing benefit,? i only ask this due to a impending divorce, if anyone knows id be ever so grateful of a pm. thank you xxwendy

timbo86

Hi guys to keep you all informed we have now completed the housing association form with trent and dove apparently we will know in 2 weeks if we have been accepted am abit worried we won't be not sure why mind you. Someone reassure me that they dont turn down people often? What reasons could they turn us down this is before the mortgage stage at the moment this is just confirming with the housing association. Any thoughts on this would come greatfully recieved.