Shared equity scheme

dmg24

You sound to me like you know what you are doing ...

There are always going to be people that will say that the market is going to crash/ that you should only buy outright/ that you should not buy if you do not have a deposit/ you should not buy a new build etc, but you need to balance their arguments with your own situation and priorities.

Take into account what people are saying, but don't let them put you off with unsubstantiated arguments.

Best of luck! x

brasso

I would go ahead and buy.

Yes, prices may well dip. They may even crash, putting you in negative equity but unless you HAVE to sell, this shouldn't matter. Yes OK, you may sit around and think: "I could be have got this property for £10K less..." but really, life's too short.

Firstly, we don't know for sure what will happen to the market, and trying to time it is impossible. Second, you may wait a couple of years for the property to drop by £10K but in the meantime you're paying rent to pay off someone else's mortgage instead. Nay as well use it to pay off your own.

It's a repayment mortgage which is the main thing. Personally I think interest-only mortgages are awful things but if you're repaying, go ahead.

The bottom line is this: if you're planning to stay in the property for a good while then I would go ahead. If your plan is to sell up in a year or two, hoping to have made a capital gain, then think again.

Ultimately, £360 a month isn't a lot of money. If you were faced with a monthly mortgage bill of £2000 that would be a different matter.

Go for it. Enjoy your new place.

Frags

Thanks dmb and brasso for your refreshing look on things!!!

stillill_2

yeah, would concur. If you're happy to ride out the downturn for a few years then go for it. Sounds like you've done your sums. If it's "once in a lifetime" as you seem to think (ie no one such as yourself with a secure job will ever be able to buy a property in the area again), what's there to lose if you need to own a home?

(ps, even people in London are priced out of the market, not just N Devon).

Good luck.

SquatNow

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.

There no such thing as a "Below Market Value" sale in the free market. It is the sale itself that DEFINES the market value. If you sell for 25% "below market value" what in fact has happened is the market value has dropped by 25%. The only exception to this is when some dodgy fraud, like "right-to-buy" takes place where someone is forced to sell something to a particular person, in which case market forces do not apply.

CYBERCIDERSAVER

Of course there is such a thing for the very reasons I mentioned.

What about all these "companies" that buy houses to rent back. Are you saying the people who sell to these are getting the value they would achieve from an ordinary sale? No. Hence below market value is a perfectly acceptable term to use.

It's just semantics.

Also, don't start on me about my spelling. Maybe an examination of your own posts would be advisable before you criticize others.:eek:

Anyway, it's just a forum. Not an English essay.;)



As to the OP, my opinion is quite clear. I'd wait, but I understand the point about the lack of affordable housing. In Bridgwater I know of no shared equity housing that has been built recently.

In the year we've been signed up to the housing register we've been sent details of 3 properties. 2 of those were too far away and one was scum central.

So If you are in it for the long term then I would say go for it.

SquatNow

Those companies are stupid. They think they are buying "Below Market value" but in fact they are not... they just haven't spotted that prices are falling. Lots of BMV companies are going to end up looking really stupid in 6 months time when the properties are worth less than they paid for them.

The whole BMV-rentback idea is a scam created by idiots. The only hope they have is to kick the new "tennants" out after the minimum period and hope to flip the property. The scam might have work if you did it 12 months ago, but running it in a falling market is pointless.

A_Nice_Englishman

I would look very carefully at the small print of this kind of agreement.

In the case of the Persimmon Homes ad quoted by CYBERCIDERSAVER I would ask who decides the market value of the property. I can foresee bitter disputes between builders and owners!

A_Nice_Englishman

SquatNow wrote: »

Those companies are stupid. They think they are buying "Below Market value" but in fact they are not... they just haven't spotted that prices are falling. Lots of BMV companies are going to end up looking really stupid in 6 months time when the properties are worth less than they paid for them.

The whole BMV-rentback idea is a scam created by idiots. The only hope they have is to kick the new "tennants" out after the minimum period and hope to flip the property. The scam might have work if you did it 12 months ago, but running it in a falling market is pointless.

No, in that case they keep the tenants and increase the rent.

Fergie73

That Persimmon thing looks like very bad news for the buyer.

For one thing, if the builder is doing it because they can't find buyers willing or able to pay their full £133,000 *market price* then the house is over-priced. If the only people who can afford to buy it can only afford £99,000 then that is it's market value, not 75% of it's market value!

If you sell the house, you have to pay back 25% of the market value. If you also can't find anyone willing or able to pay £133,000 and have to take less, there is no way Persimmon is going to change it's definition of market value downward, so you end up paying them 30-odd grand, minimum, no matter what the sale actually achieves. Hence, you could be left with a loss.

If you don't sell up, they ask you to pay back the 25% of market value after 10 years. They don't say how this is calculated, or by whom. So you're left with a financial obligation of, minimum again, 30-odd grand in 2017 but they could ask anything they wanted. If house prices rise substantially - say it's worth £300,000 in 2017 - that leaves you with an even bigger obligation because it's 25% of whatever they say it's worth.

Seems to me that the buyer is taking all of the risk while the builder can't possibly lose and is palming off unsellable property onto people. And as for once in a lifetime opportunity, do you really think with those can't-lose figures the builders will be restricting this kind of deal in the future?

Sorry to be negative, but I wouldn't touch it with a ten-foot pole. Renting may seem like dead money, but at least there's no financial risk involved. With buying there is risk, but they're known risks that you can take into account. This looks like the worst of all worlds.