Looking For Advice

cd02

Hello.

Me and my partner are getting evicted in the next 3 months as our landlady is giving the house to her mother-in-law.

Anyways, we're getting married in December and have been looking for somewhere else to rent but there's nothing suitable in the area so we decided to consider buying something.

We've now found a Shared Ownership House that's going for £66,000. We've been looking at the mortgage calculators and it says we should be able to get a mortgage for that amount but my concern is my credit history.

My credit history is very poor. Currently I have an £800 credit card debt on it which has defaulted and I'm in the process of paying it back. My partner on the other hand has a very good credit history.

We should be able to get hold of a 5% deposit but is it worth me applying or would I be right in thinking I don't have a chance in hell?

Any help or advice would be appreciated.

amnblog

There are lending options on shared ownership for applicants with very poor credit history.

The interest rates are very agressive so are therefore best used with 40% or less as your purchase share.

kingstreet

Is it a newbuild, or a re-sale?

Did you include the rent on the unowned share in the affordability calculator?

Building_Surveyor

Also check eligibility with the HA. They normally do their own initial financial assessment.

kingstreet

Building_Surveyor wrote: »

Also check eligibility with the HA. They normally do their own initial financial assessment.

... or get their friendly neighbourhood HCA HomeBuy Agent approved broker to do the SO Calculator and provide the necessary declaration.

batchoy

Having been caught out, I would beware of shared ownership and make sure you understand what you are getting yourselves into.

Two things that caught me out were firstly the fact that because it was a new build purchase price for half property was well above 50% of the true market value for the freehold, thus I was immediately saddled with significant amount of negative equity which was only increased when the market crashed. The second catch was the ground rent, my original purchase bought the lease on 50% of the property with the option to buy the remaining 50% and thus convert the property to freehold, and during the time that I didn't own it the remaining 50% was subject to ground rent. When I purchased the property the monthly ground rent was fairly nominal and affordable, however having been built by the local authority the rent was linked to the rents of all their other properties by a standard formula. Thus within less than ten years I was in the position of having a mortgage on 50% of a lease with a significant amount of negative equity and a ground rent on the remaining 50% that was costing me more than my mortgage.

The situation was only resolved by the inhabitants of the estate forming a residents association to take on the council. The position we took was that either the houses formed part of the councils stock and thus they should form part of the right to buy scheme which they weren't, or they weren't and thus should not be subject to the councils rent increase formula (which was the cause of our rapidly rising ground rent). With the threat of withheld rents and potential legal action the council included the properties in the right to buy scheme and most of us bought out the leases at a rate that meant we no longer had any negative equity, and our monthly outgoings on our mortgages were less than what they had been on the combined rent and mortgage. So whilst it turned out well, it could have been very different

I'm not saying that joint equity is bad, just that you should make yourself as fully aware of what you are getting into as you can, particularly when it comes to the ground rent on the half of the property you don't own.