My Daughter is hoping to get her first place soon, and she has been looking at some options with shared equity, but I'm not totally convinced it's the best was to go, anyone have experience of these schemes?
http://www.muirhomes.co.uk/Muir_Easy_Move_2011.pdf
We purchased via a shared ownership scheme and found it worked for us.
We were able to 'staircase' up to 100% quite quickly, if your daughter isn't likely to earn more in the next few years, so will remain a partial owner, then she needs to think carefully as the combined rent and mortgage on a typical 60-40 arrangement could end up costing more in the long term than an normal 80% mortgage.
It's a good idea in a rapidly rising market in that it allows you to get a foot on the ladder and benefit from the increased value of the property.
In the current market of little or no growth there's no benefit from shared equity because you're paying a large percentage of your monthly payments in rent rather than mortgage for no benefit.
A better option is the "homebuyer" schemes run by all the developers whereby you need a 5% deposit and get a 20% loan from the government leaving you with a 75% mortgage.
The developers are also very willing to do a deal in order to get you into one of their houses especially in November/December (year end) and towards the end of each phase of a development.
I've just looked at the link you posted (should have read it first!) and from what I've read it's an interest free loan for ten years with a charge on the property. There's nothing else to pay except the mortgage unless you sell the property when they'll want a proportional share of any profit you make.
It sounds like a good deal to me.
The deal does look ok, the only thing that concerns me is the 20% equity that will need to be repaid. The property is £145K, leaving the equity part at £29K, this figure will rise over the years, as the 20% is linked to the current market value, so in 10yrs it may well have increased a fair bit.Originally Posted by Dave+63
Yes but your larger portion will have gone up much more. If no property increase though, nothing more to pay. I think they are a good idea.
Hi
I took a 70/30 split (£250k purchase) with the housebuilder and over 15 years....i own the property 100% but they have a charge against the property so they are paid should I choose to sell it. I had to use a specific lender (Santander) and solictor, when I challenged this they stated for ease as they understand the agreement etc.
That was 6 years ago....a couple of years back i went to sell and spoke with housebuilder to agree minimum sale price, i was amazed they relied on me to propose the figure and they agreed with no hassle (i just got 3 valuations and advised them the lowest)...so simple, I didnt sell as couldnt find anything i liked and remained there. Since the house price drop they have written advising that due to drop in valuations I may wish to purchase the balance saving some monies....nice touch.
In summary, I was really nervous but the whole process was seamless and has worked for me perfectly.
I develop both residential and commercial and work with several HA's also developing their programme.
I am now progressing a model in rural locations (that would have been rural exception sites for affordable rent only) and the interest is huge for housing at 75% of OMV which here is Suffolk would be 2/3 bedroom houses at £85-90k in nice villages. The need is certainly there.
Me..... I think it is great for getting the youngsters away on the ladder.
Ta
Pitch
According to the literature, she'll only have to pay back more than originally loaned if she sells the property and makes a profit. Otherwise she has to pay off the original loan (interest free) within ten years.
I could have read it wrong but it seems to me that the loan doesn't increase in value unless she sells the property.
It depends on the alternatives, rents for decent accommodation are expensive.
Just money thrown away and having to often tolerate ignorant and bullying landlords,
and letting agencies that are no better than parasites. As long as house prices are not falling I thinking getting a start in the housing market is a good thing. Especially if you buy something that needs some work and can add some value.
Dont you have to pay rent on the part you dont own? When I looked at it 12 years ago that was it worked, so was pointless.
Personally, with a large euro crisis looming, plus our own issues regarding sovereign debt, my advice would be to save, save,save.
I can only see prices going one way, and it certainly isn't upwards.
Prices are at best going to be flat and will most likely fall outside London .(credit squeeze ,most peoples wages are frozen, inflation on basic living costs, interest rares can only go up etc are all factors that make housing prospects grim )
Tell her to wait 2 years and save like mad, houses prices are going nowhere.
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Prices are at best going to be flat and will most likely fall outside London .(credit squeeze ,most peoples wages are frozen, inflation on basic living costs, interest rares can only go up etc are all factors that make housing prospects grim )
Tell her to wait 2 years and save like mad, houses prices are going nowhere.
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