Shared Equity Confusion...

don-aldinho

Hi There,

Looking for some serious help on our shared equity situation.

In 2010 we bought our flat for £135,000 brand-new from Redrow. The flat was fairly priced based on the other 4/5 developments in the area etc

The flat was bought with a 75/25 shared equity scheme.

However 14 (ish) months later Redrow sold all developments in Scotland over to Springfield homes. Who came in and immediately slashed the prices of our flats to £105,000 ....kick in the sore spot or what after such a short period of time.

For the last 3 years we have made regular over payments and now owe around £85,000 on our share of the property.

The property is now worth around £112,000 (based on a few others that have sold in neighbouring blocks).

Based on the above info (and my own rough maths) I think that we are near break-even on our share of the property, or at least we will be very soon. We are currently saving for a deposit on a house and have came to the conclusion that we will not have any (or much) equity from this property.

Today Redrow (who still own 25% of our property) sent us a letter offering to sell us their share of the property back at current market value minus a 20% discount. This seems like a good opportunity and possibly too good to be true...so I think it might actually be.

Here is where I need help/questions answered:

- Will we end up paying more in interest on that share we take on (as the 25% is currently interested free) if added to our own mortgage than the saving we make? we still have 5 years left interest free...would we be silly to loose that?

- Will we even get a mortgage for this amount (around £107,000) for a property currently worth around £112,000?

- Redrow initially offered us 40% off their share if purchased back within 1 year of moving in...do we have a negotiating position to ask for more than the 20% off they offered us?

Sorry for the long thread I wanted to ensure it had all relevant info.

thanks so much MSE!!!

dgtazzman

Sounds to me like they want to dump what is in effect a credit portfolio and generate some cash injection into their business. Their share in your house is in effect dead capital at the moment, so I'd say there's at least going to be room for negotiation. If it was me, I'd be cheeky and start at 50%, with an eye on ending up at that 40% you mentioned.

As for the mortgage, no idea, sure somebody else will know when they wake up ^^