Shared Ownership Clarification

streetlovin

Have you taken into account maintenance of the property? Repair etc. I am assuming you earn quite a bit to be able to afford that.

How do people find another £10k out of the blue?! I struggle with even £20 -_-

Elfbert

surfer9 wrote: »

But has anyone on here that owns a Shared Ownership property simply shown they can buy the initial share and possibly not gone onto increase their share once the initial share was paid off, but just continued paying the rent, and any service charge?

Honestly, the HA won't know when you've paid off your mortgage, and won't be able to see your cash flow, so will have no idea if you could afford more or not. Once you're in, as long as you're paying whatever you owe them each month, you will basically be able to forget they exist. They won't be looking over your shoulder.

They will happily keep taking your rent from you.

Andyjflet

Elfbert wrote: »

Honestly, the HA won't know when you've paid off your mortgage, and won't be able to see your cash flow, so will have no idea if you could afford more or not. Once you're in, as long as you're paying whatever you owe them each month, you will basically be able to forget they exist. They won't be looking over your shoulder.

They will happily keep taking your rent from you.

Not true, the housing association have a charge over the property as part owners so they know everything that go's on, you cant buy more of the property without them knowing as they have to organise the valuation.

NOVAMET21

Andyjflet wrote: »

Not true, the housing association have a charge over the property as part owners so they know everything that go's on, you cant buy more of the property without them knowing as they have to organise the valuation.

I think Elfbert is referring to when someone has no intention of buying more share but just paying off the mortgage. HA will only come into equation when you want to buy more share of the property or if you want to sell the property. If you just want to have the same share then it is possible as long as you want to as HA don't know your circumstances once you buy the house.

NOVAMET21

surfer9 wrote: »

I am not entirely clear about the Help To Buy Shared Ownership scheme. Can some people help? Thanks.....

Say you are looking at a Shared Ownership property like the following:

1 Bedroom Apartment.

Full Price: £190,000, 40% Share: £76,000

Is it as simple as: If you can get a mortgage for that 40% share then basically that apartment is yours if you want it as long as you are eligible in terms of locality to the borough and can afford the rent/maintenance costs....

If some people could clarify my 3 points below that I am not clear on, that would be excellent:

1. I may have been hallucinating, but I am sure in the past when I have looked up these kinds of properties online before, some have stated that they require you to eventually own the whole 100% of the property. I am also sure I have read some require, for example a £40,000 income, even though that was much more than was required for the share on offer. If either of these sound familiar to anyone please let me know that I wasn't imagining these things.

2. Do some also only allow you to purchase up to 75%?

3. These housing associations also usually say that they expect you to buy what you can afford. Is this a rule that is set in stone? Would I HAVE to buy what I can afford or could I just buy say a 40% initial share that is being offered and leave it at that and continue paying the rental and maintenance costs forever, never owning more than a 40% share. I know it doesn't make the most sense to do such a thing, but just wondered if you have that flexibility?


My situation:

These homes usually have ridiculous rents and maintenance costs, though I have found some new builds in an area I grew up in not far from where I live now and they are actually a lot fairer in terms of these costs.

There is this 1 bed apartment. 40% share is being offered and I could buy the share outright, then just pay £330 in rent/maintenance per month, though ideally I'd take out a mortgage and bring it up to about 75% and put my money into buying more of the house and therefore paying less of the rent.

I am considering it, but just wanted help clarifying these 'discrepancies' I think I have seen in different Shared Ownership property adverts.

1. When you apply to buy SO property from HA then they will asses you affordability and the deposit you have. Depending on that, they will offer you a share % to buy. They use their own calculation tool to do this. Is it possible to buy less or more share that HA has offered? Yes but only in some cases. You can request to lower your share if you can prove that you can't get a mortgage on that original share %. I was offered 40% share but because the lender didn't lend me the amount I required they were happy to decrease the share to 30%.


There is a limit of £80k income (increased from £60k I think) and house price should be less than £600k. However, different HA might have different rules.


2. Yes some properties are only allowed to purchase up to 75% but not entirely sure why though. I don't think I would be interested if I can only buy 75% and not 100%. It is not because I may own 100% one day it is because it is more marketable as there might be people out there who might want to buy higher shares when you sell your house.


3. Again this depends on you affordability and the tool they use to calculate your share %. I don't think you can pick and choose your share % unless you prove it.

kingstreet

Andyjflet wrote: »

Not true, the housing association have a charge over the property as part owners so they know everything that go's on, you cant buy more of the property without them knowing as they have to organise the valuation.

A charge over the property?

Shared ownership?

Are you sure you're not getting mixed up with shared equity/HTB Equity Loan? This can be 100% freehold ownership with a second charge reflecting the equity loan.

Shared ownership you purchase only the leasehold interest in the share of the property you choose.

NOVAMET21

surfer9 wrote: »

Costs calculations of buying the 2 bed apartment with varying percentage shares taken out. Based on a mortgage rate of 2.19% over 25 years.

2 Bedroom apartment:
Full Value: £230,000
Minimum Share on offer: 40% (£92,000)

Deposit: £75,000
Mortgage needed: £17,000

Rent: £315
Service Charge: £100
Monthly Mortgage repayment: £74
Total: £489

Council Tax: £120
Bills: £140
Extras (TV license/Internet): £30
Totals: £290

Total Costs: £789

---

2 Bedroom apartment:
Full Value: £230,000
Minimum Share on offer: 50% (£115,000)

Deposit: £75,000
Mortgage needed: £40,000

Rent: £240
Service Charge: £100
Monthly Mortgage repayment: £173
Total: £513

Council Tax: £120
Bills: £140
Extras (TV license/Internet): £30
Totals: £290

Total Costs: £808

---

2 Bedroom apartment:
Full Value: £230,000
Minimum Share on offer: 60% (£138,000)

Deposit: £75,000
Mortgage needed: £63,000

Rent: £190
Service Charge: £100
Monthly Mortgage repayment: £272
Total: £562

Council Tax: £120
Bills: £140
Extras (TV license/Internet): £30
Totals: £290

Total Costs: £852

---

2 Bedroom apartment:
Full Value: £230,000
Minimum Share on offer: 70% (£161,000)

Deposit: £75,000
Mortgage needed: £86,000

Rent: £140
Service Charge: £100
Monthly Mortgage repayment: £372
Total: £612

Council Tax: £120
Bills: £140
Extras (TV license/Internet): £30
Totals: £290

Total Costs: £902

---

£122 more per month to own 70% compared to 40%.

£902 outgoings per month before food, travel and going out - is pretty high......

Will need to look at this again with a higher deposit as I can potentially get an extra £10,000, or maybe more of help from family.......

Please tell us how much is your salary?