Shared Ownership

cheeky-virgin

I do understand that in shared ownership you do buy 25%, 50% or what ever but what are the disadvantages of shared ownership ?

Lets say i bought 1 bedroom house in shared owner ship so its only me who is going to live in that house or other partner will be concern with that place.

luckyfool

Downsides
1. If the property increases in value you only benefit on your share
2. You will likely get a less competitive mortgage deal
3. When remortgaging in the future, unless you are buying out the Registered Social Landlord in full to go to 100% ownership then you will have a limited choice of lenders, and again are likely to find yourself paying a higher rate.
4. You are paying rent on the portion of the property you don't own.


I'm sure there are others, these are just off the top of my head. Obviously there are also benefits.

ctabuk

The Goverment have introduced an entirely new system of Shared Ownership with interest free loans of 17.5% - You need the Search 'Housing Corporation' and key in 'Homebuy Agents' there you will find a complete list of providers for your area. The range of Lenders has been increased to 'All Participating' -Some have said 'No' but with a credit squeeze about to start then Lenders will be looking more and more at Shared Ownership Mortgages. Good Hunting

Moorepart

cheeky-virgin wrote: »

I do understand that in shared ownership you do buy 25%, 50% or what ever but what are the disadvantages of shared ownership ?

Lets say i bought 1 bedroom house in shared owner ship so its only me who is going to live in that house or other partner will be concern with that place.

My advice for shared-ownership is: don't think about what you can gain through these schemes. Don't plan your next 10-15 years and rub your hands in glee .... just be grateful that the scheme enabled you to get your own "FIXED abode" when you couldn't afford a whole house. Just see it as a way to have stability in your life - you won't be at the whim of private landlords.

Around the mid-90s there was another type of equity share to be aware of though - although this has probably died a death since.

Some developers - unable to sell houses at full price - put together shared equity deals. These tended to be higher %ages. Say 80%. But their package forced you to buy the remaining 20% within set time frames - an impossibility in a a fast rising market. Many people lost their homes over this deal too.

So - read the small print and take into consideration what others here post.

And I repeat my previous posting: don't go into shared ownership looking for gains. These properties are for people who cannot afford a whole house and you should focus on being settled as being your primary driver to buy - and not future perceived profit potential.

I'd rather wait for the whole house to be sensibly priced, not just half of it.

Also, what guarantee is there that the body who own the other half will sell at low prices, rather than keep hold until they can get there investment back down the line?

ctabuk

Quotes 'Also, what guarantee is there that the body who own the other half will sell at low prices, rather than keep hold until they can get there investment back down the line?'

Absolutely non - that is why it is called 'staircasing' -The following instalments will be based on the current market value.

But your logic is slightly flawed -we are about to enter a credit squeeze -these high valuations were always going to lead to fall. Lenders will have only one option if they are to retain their market share, and that is Shared Ownership/Shared Equity Mortgages. The Bank of England has been looking at the USA Economy for some time - and the minute Bear Sterns said it had credit risk problems then the whole thing was obvious. The Government immediatly closed the door on a limited number of Panel Lenders under the Homebuy Scheme and offered interest free loans of 17.5% -thus opening up the whole SO market. Like it or not, unless house prices suddenly plummet then SO is the new boy on the block.