Shared equity scheme

Frags

Hi guys, after reading the thread about falling house proces i am slightly freaking out. I am just about to buy a property on a shared equity scheme, off plans with affordable housing scheme. Basically the market value of the property is 92.5 k and i will have a 67% stake in this property with a mortgage of £61K, no dep required and this is a repayment mortgage. My main fear is if prices crash and i am left in negative equity, i am quite new and nieve to all this being a first time buyer, i have seeked advice froom lots of people but am feel if i dont egt onto the property ladder now then i never will. Also this seemed to be relatively risk free way of doing it, when i come to sell i will get 67% of the equity, or obviously 67% of the negative equity if prices drop. Does buying off plans reduce this risk as you are getting the property at a cheaper price?

Just after some advice, someone suggested i start a new thread on this one?

CYBERCIDERSAVER

This ad was in the local rag the other week:
******************************************************
JUST AVAILABLE AT STOCKMOOR PARK:-

Persimmon Homes "Dream come True Scheme"
Plot 161 - the Bridford
2 Bedroom apartment, with a parking space.
Price £133,250. at 75% you pay only £99,950

£99,950* FOR A 2 BEDROOM APARTMENT-NOW YOU CAN AFFORD YOUR FIRST HOME!

You Pay just 75%. We’ll take care of the rest.

No Deposit
If you’re struggling to afford the home you want, or even to get started on the property ladder, we have a scheme that can help. The Persimmon Homes "Dream come True Scheme"enables you to buy the home you really want by allowing you to buy an initial 75% using our Equity Share Scheme.

You pay just 75%. You will own the whole property and you can simply pay us back when you sell. Call us today to make your dream come true.

Buy your own home right now, but pay just 75% of the price
No rent or interest on the remaining balance
Simply return 25% of the market value of the property when you sell, or within 10 years whichever is first.
You will own 100% of the property throughout.
Anyone can apply – you don’t have to be a first time buyer.


FIRST TIME BUYER & INVESTMENT PURCHASER? - ASK ABOUT OUR GREAT SCHEMES TO HELP YOU PURCHASE YOUR HOME*
*terms and conditions apply please ask our sales advisers for more details.

PERSIMMON TOGETHER WE MAKE A HOME

******************************************************

It seems to me things are getting desperate. A colleaguehas looked into this "dream come true" scheme and says that it depends on reselling at market value. I assume meaning if you sell under that (for quick sale or whatever) you still pay them back the market value of their share.

ie house wirth 100 000
sell for 90 000
owe persimmon 25% of MV = 25 000

I'd hang fire on any shared quity schemes for the mo. If the market stagnates you haven't lost anything. If it falls then you gain......

Frags

All that happens with this scheme is when i sell i get 67% equity back i dont have to pay them back anything, unless of course the market drops.

Baring in mind this is an opportunity that will come up very very rarely, particularly in this area, i live in North Deovn and no offence to anyone in London but people keep buying holiday homes down here and not living in them and they have priced all the locals out the market. If iwas to buy a 1 bedroom flat here it would cost a minimum of £120 K. House prices here just do not drop becuase it is such a sort after area and people from London and "Up North" are always buying holiday homes here.

dmg24

CYBERCIDERSAVER wrote: »

This ad was in the local rag the other week:
It seems to me things are getting desperate. A colleaguehas looked into this "dream come true" scheme and says that it depends on reselling at market value. I assume meaning if you sell under that (for quick sale or whatever) you still pay them back the market value of their share.



ie house wirth 100 000
sell for 90 000
owe persimmon 25% of MV = 25 000

I'd hang fire on any shared quity schemes for the mo. If the market stagnates you haven't lost anything. If it falls then you gain......

Why would you sell at below market value?

Frags

I guess ive answered my own question really havent I lol!! I agree its a gamble but it is really a now or never situation, there is not a cats chance in hell i will be able to have a mortgage any other way for a very very long time indeed and i look at renting as dead money. As i would be buying this property off plans its market value is currently at £97K barng in mind my Dad brought a house off plans at £75K and it is now valued at £220K, i know every house and area is different and i am aware the market is slowing down but i find it hard to beleive we are jsut going to have some major price crash.

Frags

DMG24 my thoughts exactly

CYBERCIDERSAVER

There are many reasons you sell for belkow the market value.

Unable to afford mortgage due to change in circumstances.
Want to move quickly to secure new property so price lower to attract buyer.

(some people are so dim sometimes)

Perhaps I should put it another way. Persimmon get a valuation and should that be more than the final selling price then you must still pay persimmon 25% of their "independant" valuation.

dmg24

CYBERCIDERSAVER wrote: »

There are many reasons you sell for belkow the market value.

Unable to afford mortgage due to change in circumstances.
Want to move quickly to secure new property so price lower to attract buyer.

(some people are so dim sometimes)

Perhaps I should put it another way. Persimmon get a valuation and should that be more than the final selling price then you must still pay persimmon 25% of their "independant" valuation.

Says the speaker of doom ...

Only a limited number of people would need to sell below MV, and I am sure the OP has enough common sense that they can weigh up the likelihood of them ending up in that situation.

Talking of 'dim', independant = independent.

Frags

So baring in mind this opprtunity wont come up again u would still say dont do it?

dmg24

Can you afford the mortgage?

Is your job secure, and do you have unemployment and sickness cover?

Do you have any doubts? This has to be your decision, nobody elses x

Frags

The mortgage is £360 a month, yes i can afford it. My job is secure, i will be taking out insurance to cover the motgage should i get sick and i have already budgetted for this. I am sure that taking it is the right decision baring in mind my current situation but i think maybe i should listen to myself as some people seem to be very doom and gloom about the current house price situation, i agree with being warey but i dont want to cut my nose off to spite my face and miss an opportunity that wont rise again x