Anyone has shared ownership mortgage

Lou24

I'm looking into shared ownership and was wondering if anyone on here has experience it

From start to finish

kingstreet

I do affordable housing for a living.

Do you want the pro view, or the views of exiting SO owners?

Tony_MechEng

I did/do, about to not have as moving but it's been fine for me, handy in some ways as having only 63% share I didn't have to take the full depreciation on my flat!

mjonline

Lou24 wrote: »

I'm looking into shared ownership and was wondering if anyone on here has experience it

From start to finish

Hi Lou24,

My husband and I are at the beginning stages of purchasing a Shared Ownership Resale and we're happy to share our experiences to date. Please note we're discussing the London experience, most of it should be relevant to anyone in England & Wales, but some info may be London specific.


Myth 1: Shared Ownership properties are located in bad areas and the build quality is not up to scratch
So some background, the property is a share with a local housing association a RSL. The property is a 3 bed, 2 bathroom apartment in the middle of Central London, Zone 1. Its in an amazing location with views from all bedrooms, living room and balcony over looking Regents Canal. It's stunning.

Myth 2: Shared Ownership leads to negative equity and you're better off renting and trying to save a bigger deposit
The current and original owners purchased their 25% share of a brand new 'new build' for £133k in 2009, and today in 2014 we're buying that same 25% for £200k, so there's been a 50% increase in that property's value in just 5 years. So I hope that helps to dispel the most common and prolific myth out there that Shared Ownership esp on a New-Build will automatically bring you into negative equity. It doesn't. Continually paying overinflated rental prices to a landlord in Central London means you'll never be able to save £75k for a deposit, no matter how many baked beans and toast dinners you have. We plan to be in the apartment for at least the next 5-10 years so would imagine that the property will continue to increase in value during this time period.

Myth 3: You have to be a key worker or in the military
Neither my husband nor I are key workers, my husband earns the national average annual salary I earn a little more than that. In London the salary for eligibility falls into two brackets.
a) 1 OR 2 bed property - the total income of the household must be below £66k per year
b) 3 bed or more property - the total income of the household must be below £80k per year

The brackets for outside London are a bit lower, I think its a) £60k and b) £70k - but please check!

So, the process (this info maybe more London centric)

1. If you're not already, ensure you're on your local authority housing waiting list - if you're not get on it NOW

2. Ensure you regularly keep an eye on your Credit Report - this needs to be spotless

3. Ensure you've got a minimum 5% deposit for the property/share you're interested in

4. Usually Resale properties are easier to get than a new-build Shared Ownership property (in our case this wasn't the situation, because of how awesome the flat we're buying is. There were at least a few dozen families who we were pitching against. Because of how fierce the competition was all applications had to go to a senior allocation panel at the Housing Association)

5. Don't rely on the First Steps website for info, make sure you register directly with ALL the housing associations and sign up to alerts and updates. Register your interest in every single house/flat you're interested in.

6. Go to the Affordability home shows, they happen at least 2x a year - the next one in London is Sat 8th Feb 2014. Get to know the sales people from each Housing Association, build up a relationship, ensure you maintain that relationship so that you can be first to hear when perhaps sales fall through and new properties may be coming up.

7. Make sure that you have all of your evidence ready in electronic and hard copy so that you can respond to calls for applications immediately. The evidence we needed:

a) ID - we had certified copies of passports, drivers licence (inc counterpart) and marriage certificate
b) Salary - 3x most recent payslips per person, and the latest p60 (only necessary if you're relying on bonus and commission)
c) Proof of Address - we had 3x evidence each, utility bills, bank statement, credit card statement etc etc
d) Latest Credit Report (we used Equifax, but could be Experian)
e) Last 3 months bank statements
f) Proof of deposit monies (we had letter of gift from parents)

8. You will need to get an affordability assessment completed with an IFA of the Housing Associations choice. In our experience the IFA did helpfully complete the affordability assessment quickly for us.

9) We were strongly advised by the Housing Association to use the same IFA as our mortgage broker, but unfortunately it hasn't been smooth sailing as he has recommended a product which is not appropriate (the lender won't lend on flats over 4) Fortuitously I had checked this out before paying the broker an arrangement fee and the lender a £1k application fee!! The IFA has also lied 2x to us about products which we were interested in, he told us we weren't eligible when we are, we subsequently found out that he doesn't earn much or any commission on our preferred products, we're guessing that's why he lied to us about our eligibility…

10) Start looking around now at solicitors, even if you don't have a property in mind. They all charge widely different fees. Remember, you need to make sure that your solicitor is on your lenders 'panel' otherwise you'll have to pay for two lots of solicitors. I'm a member of a Trade Union so I get really hefty discounts on my conveyancing costs, and the same solicitor is writing our Will for free as well due to my TU membership

11) If you think you'll be bidding on a property within the next 3-6 months get an AIP in place with your lender of choice (remembering to check that your preferred solicitor is on their panel). That way you can move quickly once you're offered a home.

12) The housing association have a variety of factors they need to consider when deciding who to offer a Shared Ownership 'new-build' or 're-sale' to. One of the factors I believe they will consider is ‘how ready you are to move’ (this is based on my personal opinion and anecdotal evidence) - i.e. do you have all your evidence, do you have finances in places, do you have a clean credit report, have you got a solicitor in mind, how quickly do you respond to requests for information, etc etc.

There's probably a lot more info I can give, but I can't remember everything at the min, so please ask any questions if anything unclear and I'll update this post as and when I remember things which I will I'm sure over course of next 24hrs! I can't give any more personal information with regards the specific Housing Association/IFA or Property we're hoping to buy until the sale has completed, however I am happy to answer any other general Shared Ownership or Resale related queries if I can

brit1234

Shared ownership properties were designed to inflate property prices for the builders. They have a huge amount of extra conditions and costs. They are also far harder to sell on.

Most people don't like them and to call them affordable housing is a falsehood where in reality it is simple sub-prime lending.

ricky_v

1st year mortgage and rent was about £350/month for a 1 bed bungalow with gardens, in a nice area, 5-10 minutes from the M62 and M6. It beats fully renting I suppose.

The rent charged on the other half is eqivalent to a ~3% mortgage. How I see it with this other half is either pay 3% to the housing association or pay the interest on the mortgage if you buy the other half, which is anywhere from 2%+. Inflation will, ofcourse, decrease the mortgage's value.

If you do buy the other half, then the housing association has a right to buy it's original stake up to 21 years after you've bought the stake at market value.

andyuk01

brit1234 wrote: »

Shared ownership properties were designed to inflate property prices for the builders. They have a huge amount of extra conditions and costs. They are also far harder to sell on.

Most people don't like them and to call them affordable housing is a falsehood where in reality it is simple sub-prime lending.

I'd have to disagree with this, i've got a SO property

The price i paid was in line with the market, in fact it was probably slightly cheaper - smaller, private properties on an adjacent development were selling for the same price when i bought mine - whilst some SO properties are over valued its not always the case

I cant see any reason why a SO property would be harder to sell on, as soon as i own 100% of the property the only restriction in place is a pre emption one with the housing authority - who if they purchase it back do so at full price within 4 weeks, otherwise its the open market

As for sub prime lending - i put down a £35k deposit and pay the difference between my rent+mortgage vs full mortgage as an over payment each month

SO can and should be considered a viable solution for those who have a clear plan to take 100% ownership, if you are stuck with your 25-75% then you are going to have problems

Lou24

Wow thank you all for your posts.

I am stuck as I don't know what to do. Try go for shared ownership or if I'd get a normal mortgage.

I'm going to see the em home buy and see what they say. I have seen houses I like on share ownership.

I will let you all know how I get in tomorrow
Thank you all for your info

Lou24

kingstreet wrote: »

I do affordable housing for a living.

Do you want the pro view, or the views of exiting SO owners?

I just wondered what it was really like. I have hears horror story's about so but then good. Can the HO rent be put up by a lot and so on

kingstreet

The rent is based on a Government-set formula, normally 2.75% of the value of the unowned share.

If the property is revalued, such as at purchase, or staircasing upto higher ownership, the rent can increase if the property value has increased.

The service charges are probably the most contentious issue, with some housing associations using them to generate income with regular above-RPI increases.

Lou24

Thanks king street . I'm very confused by it all tbh.
Also house I have seen - heating is
Air source heat pump

25% share -£40,000
Rest or house is £275 per month