Catch 22- Shared ownership- confused millenial ! Rejected by HA for earning to much but below 90,000

haras_nosirrah

In London I believe it is up to a 40% equity loan

I think though 450k may be too high on the shared equity calculator for your income. Anything closer to the 400k mark?

400k property using the 40% equity loan and a 20k deposit (and basing on 25 yrs rather than 35 yrs) would be £925 a month for a 5 yr fix. The equity loan would be £233 if/ when it kicks in but I would use the cheaper time period for the next 5 yrs to save as much as possible and with a combination of wage increase and savings aim to staircase to 100% after the 5 yrs.

probably cheaper than the shared ownership.

I am not saying this is 100% doable or you would qualify those rates as just going on a very basic outline and haven't done a fact find or seen evidence of income so don't take this as 'advice' but just saying that the help to buy is worth a second look.

mmlady12

okay thanks.


What is involved in the assessment? Can you give more detail.
Apart from the mortgage/rent and service charge being covered by a max of 45% of your net salary..and mortgage quotes at 3.5 times your salary.. what else do you look for when reviewing ones financial documents statement.


I recently betted in the world cup and won a good return.. I am not a regular better but will that go against me in a financial assessment

haras_nosirrah

mmlady12 wrote: »

okay thanks.


What is involved in the assessment? Can you give more detail.
Apart from the mortgage/rent and service charge being covered by a max of 45% of your net salary..and mortgage quotes at 3.5 times your salary.. what else do you look for when reviewing ones financial documents statement.


I recently betted in the world cup and won a good return.. I am not a regular better but will that go against me in a financial assessment

It is just a government calculator - simple income vs contractual commitments (loans, credit card, maintenance, car finance)

On ours it is 4.5x salary not 3.5x salary.

If every second transaction is betting I would be concerned but only if showing signs of it being a problem e.g betting while in an overdraft, massive bets to try to win back losses, payday loans. People can spend their disposable income on what they like so a flutter on the world cup wouldn't be a problem at all

mmlady12

how does it work with buying out the housing association share/staircasing? e.g with shared ownership?


e.g property is worth 270,000. I buy 60% which is 162,000


HA owns 108,000.. i know about staircasing and some HA allow you to do this.. others do not..
How does it work if one wants to buy lets say an additional 25% 2 years later


so property is worth in 2 years 280,000.. if i buy 25% additional via staircasing.. I would have to pay 25% of 112,000 (new value of 40% HA share after 2 years) which is 28,000.. where would I get that money from? if not from savings.. then how does re-mortgaging work? Can you remortgage on a 60% ownership of a property?

mmlady12

great! makes sense

haras_nosirrah

mmlady12 wrote: »

how does it work with buying out the housing association share/staircasing? e.g with shared ownership?


e.g property is worth 270,000. I buy 60% which is 162,000


HA owns 108,000.. i know about staircasing and some HA allow you to do this.. others do not..
How does it work if one wants to buy lets say an additional 25% 2 years later


so property is worth in 2 years 280,000.. if i buy 25% additional via staircasing.. I would have to pay 25% of 112,000 (new value of 40% HA share after 2 years) which is 28,000.. where would I get that money from? if not from savings.. then how does re-mortgaging work? Can you remortgage on a 60% ownership of a property?

Staircasing is based on market value. I don't know any housing associations that don't allow staircasing but some properties have a cap of 80% ownership but generally this is in rural areas (known as a resale price covenant rural exception scheme)

Most people would remortgage to staircase e.g. if you buy at 260k 60% with a 20k deposit then your mortgage would be £136k

2 yrs later your mortgage is down to 130k property value is 280k and you want an extra 25% share (I would never recommend to go to 85% on a shared ownership but that is by the by)

your deposit is 60% of 280k minus 130k mortgage = £38,000
this gives you a 38k deposit against a new property value of £238,000 (85% of 280k) so you would need to raise a 200k mortgage and the rent would go down to 15% rather than the 40% of the full property rent that it was so if the rent was £250 on the 60% it would be £93.75 a month on the 85%

I think the best thing to do would be to speak to a broker who knows shared ownership and shared equity and see which is the better option for you. I just wanted you to know your options aren't as limited as you feared.

mmlady12

thanks! I get it