Shared Ownership Deposit Question

Jamie_Walker

We are currently trying to get eligibility with L&G affordable homes for a shared ownership. 

We’ve had to go through Torc24 for these checks who do the affordability checks.

We both meet the criteria of the governments scheme, however one thing has been asked. In total we have a total of £53k in savings.

£20k (more than 10%) deposit is being put down, we have allowed £3k for legal fees, and £10k to move in and furnish (as we’re both first time buyers moving out of family homes), we also are planning a wedding, which has been booked before we found this house, and £20k has been saved for the wedding.

We’ve been told by Torc24 that the full amount of savings have to be put down. Which we don’t feel is fair. We have other commitments in our life and the money has been assigned to things, it’s not as if it’s sat their not being used. 

We can’t afford a larger deposit, nor could we afford a higher mortgage on the salary we are on, hence why we’re going for a shared ownership. 

Is this company allowed to dictate how much we put down as a deposit, or what share we buy? We’re purchasing 65% of the property.

MobileSaver

Jamie_Walker said:

We’ve been told by Torc24 that the full amount of savings have to be put down. Which we don’t feel is fair. We have other commitments in our life and the money has been assigned to things

Are you sure that you or they haven't misunderstood something along the way?

I can fully understand that the terms and conditions mean you have to tell them about your total savings but that is different to having to put your entire savings down as the deposit; that does not sound at all right as it would literally leave you with nothing in the bank the day you move into your new home...

Jamie_Walker

MobileSaver said:

Jamie_Walker said:

We’ve been told by Torc24 that the full amount of savings have to be put down. Which we don’t feel is fair. We have other commitments in our life and the money has been assigned to things

Are you sure that you or they haven't misunderstood something along the way?

I can fully understand that the terms and conditions mean you have to tell them about your total savings but that is different to having to put your entire savings down as the deposit; that does not sound at all right as it would literally leave you with nothing in the bank the day you move into your new home...

This is exactly what we’ve said, and we’ve had to provide a breakdown to ensure they’re happy with why we’re not putting the full amount down. Torc24 have been an absolute nightmare from the start, as already had our own mortgage advisor who’s got us a DIP, so all we need off them is the checks to be carried out for affordability and eligibility, it’s taken 2 weeks, and we’re no where forward. 

MobileSaver

Jamie_Walker said:

MobileSaver said:

Jamie_Walker said:

We’ve been told by Torc24 that the full amount of savings have to be put down. Which we don’t feel is fair. We have other commitments in our life and the money has been assigned to things

Are you sure that you or they haven't misunderstood something along the way?

I can fully understand that the terms and conditions mean you have to tell them about your total savings but that is different to having to put your entire savings down as the deposit; that does not sound at all right as it would literally leave you with nothing in the bank the day you move into your new home...

This is exactly what we’ve said, and we’ve had to provide a breakdown to ensure they’re happy with why we’re not putting the full amount down. ... all we need off them is the checks to be carried out for affordability and eligibility

Having to put your total savings down as the deposit simply cannot be correct so I would be asking for the terms and conditions that allegedly stipulate that; this should easily resolve that particular issue.

However, it may well be that your £53k in savings makes you ineligible for the shared ownership scheme unless you put more of your savings down as the deposit. I suspect they'll look at your breakdown and tick each line as either acceptable or unacceptable, so legal fees and moving costs may be fine but £20k on a wedding/honeymoon may be deemed unacceptable when you're claiming you need help to buy a house. 

Ultimately a mortgage is a privilege not a right so within reason yes that can insist on more of your savings going towards the house if that's their policy.

Jamie_Walker

MobileSaver said:

Jamie_Walker said:

MobileSaver said:

Jamie_Walker said:

We’ve been told by Torc24 that the full amount of savings have to be put down. Which we don’t feel is fair. We have other commitments in our life and the money has been assigned to things

Are you sure that you or they haven't misunderstood something along the way?

I can fully understand that the terms and conditions mean you have to tell them about your total savings but that is different to having to put your entire savings down as the deposit; that does not sound at all right as it would literally leave you with nothing in the bank the day you move into your new home...

This is exactly what we’ve said, and we’ve had to provide a breakdown to ensure they’re happy with why we’re not putting the full amount down. ... all we need off them is the checks to be carried out for affordability and eligibility

Having to put your total savings down as the deposit simply cannot be correct so I would be asking for the terms and conditions that allegedly stipulate that; this should easily resolve that particular issue.

However, it may well be that your £53k in savings makes you ineligible for the shared ownership scheme unless you put more of your savings down as the deposit. I suspect they'll look at your breakdown and tick each line as either acceptable or unacceptable, so legal fees and moving costs may be fine but £20k on a wedding/honeymoon may be deemed unacceptable when you're claiming you need help to buy a house. 

Ultimately a mortgage is a privilege not a right so within reason yes that can insist on more of your savings going towards the house if that's their policy.

Okay, thank you for the advise 😊 We will see what they come back with.

annetheman

If they are difficult about it, there might be other housing associations in your area who are not - it is not a general rule, though they can make whatever unfair rules they want within the confines of the law. My HA didn't mind how much I had in savings but I had to buy the largest %age share I could afford using the govt Help to Buy calculator thing with deposit and mortgage. The %age affordability was largely dictated by the mortgage, which was by extension dictated by my income, and how much I *decided* to put down as deposit with my lender, not them. Then also had to fit under their income threshold etc per govt Help to Buy rules.

Just my advice as someone selling up a Shared Ownership flat, for anyone who cares:

As a warning, you will find that a lot is 'unfair' throughout your shared ownership experience. It is the worst form of tenure because it is a mix of leasehold with all the usual leasehold problems AND assured shorthold tenancy with all the insecurity therein.

Please learn about leasehold (things like marriage value, leasehold law etc - great blogs available and YouTube for quick bites!). I cannot stress this enough - PLEASE read and understand your lease VERY carefully, especially covenants around selling and staircasing - how much can you staircase and how often? What is their nomination period like? What fees will you have to pay when doing either? Can you sell on the open market, and when? Can you make a profit on the open market? Will they get a %age of such profits? Etc.

kingstreet

You are required to purchase the largest possible share and that can mean a larger mortgage and/or a larger deposit if either or both are possible. The broker in question is simply applying the rules of the shared ownership scheme where the objective is to provide as much affordable housing as possible within the allocated budget.

I've had to tell people exactly the same for the Registered Social Landlords who ask us to do SO assessments.