Shared Ownership

Super_Ram

Hi All,

Looking for some advice on the below

Me and my partner are looking at trying to get a Shared Ownership property for 25% percent of the house at around 35K

My Credit rating is not good and neither is my partners as we both have past defaults.

In terms of deposit we have up to about 15K tp put down.

Now I know with Bad Credit it is hard to get a Mortgage but a lot of people mention the more deposit you have the more chance of being accepted and with the Mortgage value we want being 35K and a deposit of 15K it will be nearly 50% deposit.

Could anyone advise what chances we would have of gaining a Mortgage with this amount and percentage of the total and what are the best places that would maybe consider accepting us

Thanks for all your help in advance

Lilla

Oh dear poppy10, where does your experience come from...?

Super_Ram, in answer to your question, you're best placed to seek advice from a broker near you, who dealt with the housing associations in your area and has arranged mortgages for shared ownership before. If you google HomeBuy Agent for your area, they'll also be able to recommend a few brokers they deal with.

Whether or not you can borrow and how much will depend on the exact details of your credit history and your current situation, including your income and outgoings.

I assume you are aware of how shared ownership works, but the broker will be able to explain it in detail as well. Don't worry, it's not a scam, but it is not a solution suitable or preferred by everyone and as it comes with various restrictions, indeed some people feel frustrated by it - but that happens even with normal mortgages

Super_Ram

Thanks Lilla for the advice.

Everyone is entitled to their opinion but I am aware of the 2 main posters on here that seem to in my opinion just post negative comments with no reasoning.

I am aware that no matter what scheme or plan you get into there can be potential risks and benefits.

I am not an expert on Shared Ownership or Mortgages in general but I know a few people who have Mortgages outwright and there houses are now in negative equity and they are stuck with it so it can happen no matter what type of Mortgage you get although I would say seen as you only own 25% the negative equity amount would not be as much impact. Also as we are looking to lay down a sizeable deposit then there is security there.

We know why we want to do it this ay and how it can help us in a few years time but also are making ourselves aware of the risks and costs you take on such as paying part rent, house prices falling or incresing etc.

One question I have is around the house pricing thing and how it works.

For instance say we bought 25% of a house worth 80K which would be 20K. For arguments sake we didnt put a deposit down and got the Mortgage for 20K. Then in 5 years time we had paid the 20K off and were looking to get another 25% however house prices had risen by say 10%. Would this mean the 10% rise would be split over the whole house so each 25% would now be worth 22K instead of 20K meaning the plus side is the part we bought is now worth 2K more but the downside being the next 25% we bought we would be paying 22K instead of 20K for it.

Also in terms of negative equity it would work in the other way where the percentage we bought would be now worth 18K instead of 20K but to buy an extra 25% it would now be 18K instead of 20K.

I know nothing is straight forward in this world but our aims are below in terms of what we are trying to get out of the Shared Ownership:

- Easier way to get onto the Property Ladder due to our deposit being nearly 50% of what we want to get a Mortgage for
- Own smaller amount of the Property allowing us to pay off quicker and also save up even bigger deposit(and we know there will be rent charges)
- A few years on the Property ladder for our Credit Reports to clear up and ge them improved to a good standard

Then depending on how it goes either invest more in the exisitng property we are in or look at selling(which we know is not straight forward) and using our larger deposit and good credit to get a full Mortgage.

Again thanks in advance of any replies

Lilla

Hi, I was happy to see your post showing that you do have an understanding of the scheme and appreciate the risks. I can confirm that your assumption is correct about the value going up / down and how it impacts on your equity and potential price for a further share.

Net, it seems to me that the matter will come down to checking whether your credit history can be accepted by any of the shared ownership mortgage providers and if yes, how much they will be able to offer to you.

I'll keep my fingers crossed for you and your other half!