Advice for shared ownership with DRO

devilchef

Hi all forumites,
We are currently half way through our DRO term. However we have recently been left a large sum of money from our family in South Africa.  We were hoping to put a chunk of this money towards a shared ownership...paying 100% of the applicable mortgage and paying the rent on the part not owned. Now, this would mean we wouldn't need any mortgage, how would or could this work even with a DRO? Any advice is welcome.
Thanks

Alderbank

Who is 'we'?
Are there several of you?
You don't need a mortgage for shared ownership, you can pay your share in cash. You can get shared ownership if you can afford to pay for a proportion of the house you want but you do not have enough to pay all of the price.

So if the house you want costs £300k and your 'large sum' is £200k you might be able to get shared ownership but if the 'large sum' is £400k you wouldn't - you can afford to buy the house without state help.

You do need to comply with certain other rules as well. Read this website:

https://www.gov.uk/shared-ownership-scheme/who-can-apply

eddddy

devilchef said:

We were hoping to put a chunk of this money towards a shared ownership...paying 100% of the applicable mortgage and paying the rent on the part not owned. 

I'm not sure what you mean by "paying 100% of the applicable mortgage". Do you just mean you would be buying without a mortgage - or something else?


Anyway, if you've received some money, you have to tell the Insolvency Service, so that they can do a reassessment to see if you're still eligible for a DRO. If you now have more than £2000, I believe that your DRO will be cancelled, and you'll have to pay all your debts. (But I'm no expert on that. So maybe get advice from elsewhere.)

Similarly, if you own a property (including a share of a shared ownership property) worth more than £2000, you would be ineligible for a DRO.


And if you tried to 'break the rules/law' by buying the Shared Ownership property without telling the Insolvency Service about your money, and without telling the Housing Association about your DRO, I suspect the Housing Associated would find out when they ran credit checks on you.

devilchef

eddddy said:

devilchef said:

We were hoping to put a chunk of this money towards a shared ownership...paying 100% of the applicable mortgage and paying the rent on the part not owned. 

I'm not sure what you mean by "paying 100% of the applicable mortgage". Do you just mean you would be buying without a mortgage - or something else?


Anyway, if you've received some money, you have to tell the Insolvency Service, so that they can do a reassessment to see if you're still eligible for a DRO. If you now have more than £2000, I believe that your DRO will be cancelled, and you'll have to pay all your debts. (But I'm no expert on that. So maybe get advice from elsewhere.)

Similarly, if you own a property (including a share of a shared ownership property) worth more than £2000, you would be ineligible for a DRO.


And if you tried to 'break the rules/law' by buying the Shared Ownership property without telling the Insolvency Service about your money, and without telling the Housing Association about your DRO, I suspect the Housing Associated would find out when they ran credit checks on you.

I understand the rules around a DRO this but this was not my question. My question was if I am able to afford 100% of the deposit..ie 40% of £250000 (£100000 deposit) How would that work in relation to getting a shared ownership property as we wouldn't be able to afford the total £250000.
Thanks

eddddy

devilchef said:

I understand the rules around a DRO this but this was not my question.

Eh?  Your question was very much about how a DRO worked. The title of your thread was literally:

devilchef said:

Advice for shared ownership with DRO

and you asked...

devilchef said:

...how would or could this work even with a DRO?

Moving on to your later question:

devilchef said:

....if I am able to afford 100% of the deposit..ie 40% of £250000 (£100000 deposit) How would that work in relation to getting a shared ownership property as we wouldn't be able to afford the total £250000.

Thanks

I guess you mean...

You want to buy 40% of a shared ownership property. So if the property's full market value is £250,000, you would pay £100,000 in cash for 40%.

If so, Yep - that's how shared ownership works. And you would then pay 60% of the market rent each month.

And you can buy a bigger share later on, if you want. e.g. You could buy another 10% so that you own 50%, in total. (And your rent would reduce to 50% of the market rate.)

But you'd have to pass eligibility tests at the start. (e.g. to check that you can afford the rent, etc)





Edit to add...

You use the term "deposit" and previously talked about "paying 100% of the applicable mortgage".

I think I know what you mean, but you're using the terms "Deposit" and "Mortgage" wrongly. You might cause confusion if you use those terms when discussing your plans with a Housing Association.

You're not planning to take out a mortgage (i.e. you are not getting a loan from a bank), and therefore there is no concept of you paying a deposit.

km1500

legally you must inform the insolvency service about any money you get particularly a large sum. They may well cancel your DRO and ask you to pay your debts out of the money but to equally they may not - they may just allow the DRO to continue

Once you have done this you will then know how much money you have got to put towards your property