Part buy/part rent possible?

calmspirit

Hi
just a thought really .....a possible lifeline for me and my kids perhaps.

I am currently trying to sell my property (long long story not relevant here!)

If I sell I will have approximately £55-60,000 from equity ....but.....no way of raising a mortgage (or affording one!) to buy another property for me and my kids (low income with WTC & CTC)

I have been browsing internet....dangerous I know! and have been looking at part buy/part rent schemes, mostly available to key workers but some have other criteria .

Can anybody advise if they think it will be acceptable for me to use money from this property to buy say a 30% share ..ie no mortgage then just pay the rent part?

examples on the housing web site 185,000 house 35% = 64750 (ok my parents may need to help with the extra!) then £200 rent/ 147,000 house 50% 73500 £155 rent plus £22 service charge.

These figures are just a random example but bearing in mind my current INTEREST ONLY mortgage is costing me nearly £500 per month (I have never defaulted) this option would cut my outgoings dramatically whilst still giving my kids the security rather than rented accommodation.

I know this is all dependant on whether I am accepted on the scheme..but if I am do you think they would accept my 'cash' purchase and rent to me despite my low income (I am asking because they seem to have a minimum earnings criteria which I would not meet but can I presume that this is because it's normal to raise a mortgage for my share of property?)
my income with tax credits is approximately 13,000
sorry for long post !

xxx

Dinah93

Personally I have always been a little wary of the part buy/rent schemes, as you only own half the property, but are responsible for 100% of the bills, 100% of the upkeep, and you would have to read the T & Cs very very carefully to find out if the increase/decrease in value is split or all yours when you come to sell again. Noticing your signiture, and the fact that you are on interest only now, might it not be worthwhile to pay off your debts with the money you make from the sale of your property, and move to a rental place debt free, and wait to see how the housing market works out. This would also free up any money you are currently using on debt repayments, and you won't keep racking it up. You can then stick it in a high interest account for a year or two, and then maybe look to get on the ladder again when circumstances change.

calmspirit

Hi Dinah and thanks for reply.
I understand what you are saying, but the way I was looking at it was by reducing my outgoings (ie swapping mortgage for part rent only payments as my percentage of property will be bought for cash) then this will free money to pay off debts.
If I go into rented then any money I have will be eaten away quite quickly by rental of another property....leaving me in a few years with no equity and no house. Plus any property to rent will cost me much more than I currently pay in mortgage.... increasing my outgoings and debt.
A secure and permanent place for my kids is high on my priorities and I
really dont know how to go about getting that!
thanks for advice ..I am still reading up on the ins and outs and weighing it up against my circumstances and my desire for security for my kids as they have been through enough these last few years
x

PasturesNew

Personally, I feel if a person is in the position of never being able to afford a whole property with a mortgage ever, then the SO option is a definite compromise. You do get that security of tenure that you can't get from renting. And if the SO is with a Housing Association/similar (and not a private developer) then you are pretty much assured of reasonable rent increases over the years.

I'd still require a house though, definitely never a flat.

I personally have done it in the past for that reason (thought I'd never afford a whole property) and I'd do it again (except I would no longer qualify under their terms)

The only point I'd make is: as the market is falling, it's still worth waiting awhile right now (couple of years at least) to get one at the best price possible.

Rabiddog_2

Go on then? Why is a House Ok but not a Flat? Also I thought only housing associations did SO not private developers?

calmspirit

thank you
I really have to weigh up the costs of renting for say 2 years at 695 per month average for a house, using much of my equity ...and how much I think property prices may come down in those 2 years..against the security of having a house, albeit only actually owning a percentage of it, that I am unlikely to lose if a landlord decides to sell etc
I still think I am missing something important .....I am looking at this as a way to give my kids security of knowing where they live whilst also reducing my outgoings and therefore debt......
I will phone the people up tomorrow and ask......I probably wont be entitled to apply anyway!
thanks again for comments and help
x

calmspirit

well I applied for said shared ownership having found a buyer which will give me 68k after selling house/fees. My plan was to pay off cards leaving me 60k-63k to buy share with no mortgage leaving only rent to pay 150-200 per month........guess what?...
I was turned down because my income is not 18-60k !
So leaves me to rent privately until all my equity gone in a few years then apply for council housing........great ! maybe i should just default on my mortgage and get repossessed and miss out the private rental in between ! what a silly situation !

sorry rant over!

MadSebW

If you have that much money out of your property why on earth would you want to take away a house on the SO scheme which were provided for people who can't get a mortgage? Rant all you like, but i'd be rather upset if they had of said yes. My husband and I would do anything to buy a house normaly, but our income only gives us the chance to buy something for 60k and the cheapest in this area is around 100k.. SO is our only option and thankfully we found our property, but there are only ever a few at a time and if you were using one of those up that would be ridiculous when you can obviously afford to buy normally.

calmspirit

MadSebW wrote: »

If you have that much money out of your property why on earth would you want to take away a house on the SO scheme which were provided for people who can't get a mortgage? Rant all you like, but i'd be rather upset if they had of said yes. My husband and I would do anything to buy a house normaly, but our income only gives us the chance to buy something for 60k and the cheapest in this area is around 100k.. SO is our only option and thankfully we found our property, but there are only ever a few at a time and if you were using one of those up that would be ridiculous when you can obviously afford to buy normally.

I'm afraid you are wrong....I CANNOT afford to buy normally! I cannot get a mortgage because I dont earn enough......I wish I could buy something for 60k here but trust me not even a mobile home is possible for that ! Unlike you my earnings are not enough to even afford a 60k house(or even 6!) so my equity was my only hope of securing a home for me and my kids .....how is that different from you raising a mortgage for that amount and renting the remaining from SO?
I am sorry you would be upset if I was offered a SO home...but what would you suggest I do for a home for me and my children when, unlike you, my earnings are not enough to raise a mortgage?
The SO scheme here has minimum earnings criteria aimed at people who can raise a mortgage, so I think perhaps we might be talking about different schemes?