Shared Equity Home - What to do next?

Pixie5740

AnotherJoe wrote: »

This isnt any help to you but I'm staggered how many of these part purchase house deals are coming up on here with this sort of issue, where they are worth less after TEN years than when bought.You are by no means the only people in this catch 22 situation.

Whereabouts is this house? Seems to me either something exceptional occurred in the area, like mass redundancies, or they were grossly overpriced in the first place.

It's not that surprising. 10 years ago was 2006, house prices across the country were rising fast but about to come to a sticky less than 2 years later. Lots of people who bought in 2006-2008 are breaking even at best. You could still get 100% LTV mortgages and buying using a builder's shared equity scheme where you put down diddly squat of your own money was more or less the same type of thing. People didn't worry too much about what would happen 10 years down the line when the equity loan had to be repaid because house prices would keep rising...right. I think more of these will start popping up on the forum in the next year or so.

It's a bit like the interest only mortgages where people have no repayment vehicle. There's been a trickle but as time goes on there will be more and more people getting to the end of the mortgage term with no means of repaying it and there will be a mass outcry of being mis-sold.

Apologies OP, I've gone way off topic.

Haylescom

Grenage, the OP has attempted a transfer of equity but the builders have prevented them from doing so.
This is not always a straightforward process on properties without this added issue of builders owning part; when I attempted to do this I was refused because my house was in negative equity and they would only accept an LTV of 85% (essentially it is a remortgage) as well as assessing affordability of the sole owner.

Pixie5740

Are these friends buying properties using shared equity buying in the same area as your property? Have any of them actually sold their properties for £180k? If not then where is this £180k valuation coming from?

Grenage

Haylescom wrote: »

Grenage, the OP has attempted a transfer of equity but the builders have prevented them from doing so.
This is not always a straightforward process on properties without this added issue of builders owning part; when I attempted to do this I was refused because my house was in negative equity and they would only accept an LTV of 85% (essentially it is a remortgage) as well as assessing affordability of the sole owner.

Thank you. I read that the remortgage was a problem, but didn't see anything stated that a transfer of equity had been denied.

Could the builders block a transfer? I mean, how would they lose out?

Haylescom

I don't know unfortunately; it could be written into the contract, it could be due to negative equity or concerns that 1 person alone will not afford the pay off after 10 years.

Luke1987

mrginge wrote: »

So let's say you'd moved out and bought another property instead of renting. You pay that mortgage on your own with no contribution from her.
Then let's say that this other property had increased in value over the last two years by 20k.
Would you be offering to give your ex half of that equity?

I would not be able to buy another house, a) because all my savings went into paying the deposit for the house she is living in (I put up the whole deposit) and b) I would not be able to get another mortgage becuase I am still liable for the one I am tied into.

mrginge

Luke1987 wrote: »

I would not be able to buy another house, a) because all my savings went into paying the deposit for the house she is living in (I put up the whole deposit) and b) I would not be able to get another mortgage becuase I am still liable for the one I am tied into.

You have missed the point but never mind.

lets do this very simply. How much is left outstanding on the mortgage?

Mummyto4kids

You've contributed £5k to the deposit and paid (I assume) half the mortgage payments for the 2 years you've lived there. She has paid the other two years mortgage payments in full since she has lived there without you, and presumably 50% of the mortgage payments for the two years when you lived together. The house has gone down in value by £10k - I don't know where you get the £10k from as money you should be paid. The house isn't worth what you paid therefore there is no equity to split or buy out?


I had a similar issue with my ex when we got divorced. The judge awarded me the house in our financial settlement as it was in negative equity, I rented it out and sold it two months ago for £950 less than we paid for it ten years ago. The only "profit" I made was the difference between the sale price and the mortgage outstanding - which was only fair because I paid the mortgage once he moved out!

silvercar

Luke1987 wrote: »

Ive had to move out of the house, Ive had to pay rental costs over and above what she pays in monthly mortgage repayments?

You see these arguments repeatedly.

Firstly, you didn't HAVE TO move out, you could have both lived separately under the same roof.

Secondly, the person in the house has paid all the mortgage but has also enjoyed having the house to themselves. Think of it that they could have taken a lodger to share the property with and used the rent from the lodger to pay the other person's share of the mortgage.

Whether half the mortgage equates to half the rent for the property is not that relevant, there is also the question of who pays maintenance. Who pays all the utility bills etc. I'm trying to illustrate that the person who stays in the property has a lot more outgoings as a consequence.

Of course the person moving out also has costs, but we know that 2 people can live cheaper than 1.

kaylajane

I once had this type of property. My understanding was that it isn't the transfer of equity that is the problem, it would be the additional 10k of borrowing to buy you out. For example, say the builder owns 25%, after 4yrs there wouldn't be much, if any, equity in the property, therefore borrowing an extra 10k could take your ltv over your original share, effectively borrowing against something that isn't yours. Sorry if this is wrong or confusing, but that is how it was explained to me when we had a shared ownership flat.