Shared Ownership

angeljay

Hey just after some advice really on this, after my partner leaving me just over 6 months ago I have taken on full responsibility for paying the mortgage on our 2 bed house. The house is still in both names and so is the mortgage. The fixed rate runs out with northern rock in May 2009.

However I am finding it harder to pay the mortgage and survive with any monery to spare each month. I am considering selling up and renting but this as I have been told many times is dead money!!! However renting would allow me to have some extra cash!!! I.e. less monthly payment, no life insurance, no bolier breakdown or buildings cover.

However there has recently been some new flats built on a shared ownership basis near me, I am particularly intersted in these flats but also looking at a part exhange with the company for one of the flats.

However this is what I am confused about, I estimate my house is worth 100 - 105 K on the market at present. I owe 98K and the shared ownership is 25K - 35K depending on how much u buy.

If i part exchange my house for example 90K leaving me 8K mortgage and then the 25K on top would this lower my monthly payments out? I understand there would be rent for the flat but it does allow me to have my own place in my own name!!!! No hassle from ex then.

How would it work with a part exchange?

If you can suggest any other way I am able to keep this house without being repossed I would be most grateful, my worse problem is that when the fixed rate is up and i have to remove my ex I won't get the full amount of mortgage on my own. This could be an option I consider now.

Thanks for your advice I hope I make sense in the post.

angeljay

If I buy a 20% in the flats with rent on top this works out at about £500 a month, which I think I can deal with. But what would happen with the additonal money from NR not paid and would i owe them 3K ?

UK007BullDog

You would need to find the money to pay back the whole mortgage. So you would need to find a loan. You cannot have any money outstanding. You would have no money left. You should not sell under your mortgage cost unless you are completely broke.

Is your northern rock mortgage on repayment? Would it help to change it to an interest only mortgage to make your monthly payments lower?

If you are tied in you will have to pay more back than the mortgage as you are breaking the contract with them. Look at 3% to 5% early repayment charge on the exact outstanding amount.

Dig out your mortgage documents and read up on the costs of closing down the mortgage early.

What about a lodger? that can help you.

UK007BullDog

Rent is not dead money!!!!

You are purchasing/leasing a service/product. For exchange of money you get a lovely warm place with a roof over your head to live in and store your goods.

Alternatively try the street. Its free but not comfortable.

One could say paying a mortgage is also dead money as you pay back way more that you ever paid for the house. All that interest is also dead money.

The phrase "dead money" was thought up by some clever sales/marketing whizz to get people to buy, buy, buy......

angeljay

UK007BullDog wrote: »

You would need to find the money to pay back the whole mortgage. So you would need to find a loan. You cannot have any money outstanding. You would have no money left. You should not sell under your mortgage cost unless you are completely broke.

Is your northern rock mortgage on repayment? Would it help to change it to an interest only mortgage to make your monthly payments lower?

If you are tied in you will have to pay more back than the mortgage as you are breaking the contract with them. Look at 3% to 5% early repayment charge on the exact outstanding amount.

Dig out your mortgage documents and read up on the costs of closing down the mortgage early.

What about a lodger? that can help you.

Cost to end mortgage early as far as I can tell is £3000.00 the problem I will have in one years time is that I will not be able to afford nor remortgage in my own name as my salary is not enough. I thought part ex for shared ownership now would possible be a better option.

UK007BullDog

Well, you need to sit down with someone or yourself to do the number crunching. Maybe even shared ownership is not the way to go either as the rates are higher and you will have both rent and mortgage payments. Will those be lower than your current mortgage?

You might just have to sell up for a decent price next year to at least get your mortgage covered and then rent and start a new.