Shared ownership homes

[Little-Miss]

Is there anyone out there who is currently in a shared ownership property?

 

I'm basically looking at the "for" and "against" of it. I'm new to all this mortgage lark and still trying to get my head round it, but S.O seems to good to be true.

 

 

Thanks

[karldenton]

I'm living in a shared ownership apartment.

As i'm single and at the time could only get a mortgage 4x my salary it seemed sensible. Basically doing 50-50 so pay mortgage each month and rent each month. Must better than just renting as some of the apartment is mine. Just check on the conditions if you come to selling as you usually have to sell your half back to the housing assocation.

[Mandy]

I'm looking into Shared Ownership at the mo, i think it is really good to get you on the property ladder! The only problem I'm finding is the choice of property, generally i find (in my area Windsor/Maidenhead) that they only build apartments/flats?! My partner has 2 young children so it is essential we have a 2 bed house with garden - these are extremely difficult to find... I still think the Pro's out way the Cons - better than throwing your money away renting. I'm just waiting for the right property to turn up...

[sippo]

Good if you can't get a mortgage, but I find it hard to work out that the mortgage payments for say 50% and the rent is more than having a mortgage on your own!!

[mb2k01]

... better than throwing your money away renting. I'm just waiting for the right property to turn up...

 

I love it when people say this! How is it throwing your money away?

 

1) You generally pay less rent than you would if you owned the same house and had a mortgage aquired today

2) You don't have to place a large deposit to rent a decent house

3) Once you've bought your house and circumstances change (kids, area, want something new etc) you have to wait to sell, sometimes making a loss, very stressful etc before you move. Renting you just move

4) How many people pay off their house? How many end up always remortgaging? How many fall in to difficulties? How many get re-posessed? Renting cures all of that

5) If you loose your job or take a pay cut then your mortgage company won't care and your stuck. If you rent in that situation then you move to somewhere more affordable

 

 

I'm sure I could list more (those are straight off the top of my head - I have this discussion regulaly with my assistant!!)

 

MB

[jamesb]

1) You generally pay less rent than you would if you owned the same house and had a mortgage aquired today

 

I certainly am. Plus I wouldn't be able to get a mortgage today.

 

I did look into it though, I'd be paying nearly twice what I'm paying in rent.

 

2) You don't have to place a large deposit to rent a decent house

 

Agreed, usually one month's rent as a security deposit, sometimes another month on top.

 

3) Once you've bought your house and circumstances change (kids, area, want something new etc) you have to wait to sell, sometimes making a loss, very stressful etc before you move. Renting you just move

 

Moving is always stressful, whether you're renting or not. Maybe less stressful on the selling/buying though.

 

4) How many people pay off their house? How many end up always remortgaging? How many fall in to difficulties? How many get re-posessed? Renting cures all of that

 

Unless of course you can't make rent, then you get kicked out.

 

5) If you loose your job or take a pay cut then your mortgage company won't care and your stuck. If you rent in that situation then you move to somewhere more affordable

 

If you can manage to sell in such a situation I think there's an advantage to buying over renting here. Otherwise I'll stick with renting.

 

I don't feel like I'm throwing money away at all. House maintenance is taken care of by my landlord. I can make reasonable modifications to decor and so on however I choose. I've got plenty of space, nice garden, nice area to live in. I've got a few months rent tucked away so even if I do lose my job I've got a few months before I'll even start struggling, or the option to simply up sticks and move somewhere else if I find a reason to.

 

There are drawbacks to renting, I'll admit, but most of those are situational and don't apply to me.

[steve]

My sister lives in a SO house and is happy with it.

 

However I have philosophical objections to SO.

 

By buying into SO, house prices are being kept artificially high.

 

The only way houses will become affordable is if people don't buy - demand will drop and so will prices.

 

House builders are hell bent on keeping prices high, if people can't afford a full mortgage on a house, then how about half of one then. Where will it end? Owning a 10th? a 100th?

 

We should stop seeing houses as an investment and go back to seeing them as a place to live.

 

I also hate the obsession with property programs showing people trying to get rich quick from property.

 

BTW I don't have a house / mortgage, I'm saving for a deposit and waiting until I can afford a place myself.

[Sylv3r]

Thanks for this. I am currently looking for a house for myself as a first time buyer and hoping to get onto the property ladder.

 

Infact I am off to view a house tomorrow - lets see how it goes. Its the hidden costs into buying a house then I am unsure of.

[torledo]

My sister lives in a SO house and is happy with it.

 

However I have philosophical objections to SO.

 

By buying into SO, house prices are being kept artificially high.

 

The only way houses will become affordable is if people don't buy - demand will drop and so will prices.

 

House builders are hell bent on keeping prices high, if people can't afford a full mortgage on a house, then how about half of one then. Where will it end? Owning a 10th? a 100th?

 

We should stop seeing houses as an investment and go back to seeing them as a place to live.

 

I also hate the obsession with property programs showing people trying to get rich quick from property.

 

BTW I don't have a house / mortgage, I'm saving for a deposit and waiting until I can afford a place myself.

 

supply and demand has in actuality had little to do with the house price inflation of the last decade. Demand is the function of the ability to finance. I 'demand' an audi R8, but if the bank aren't willing to advance me the credit to purchase or if i can't arrange finance then i can demand all i want, and the supplier can be willing to supply me, but just wanting or willing that transactoin doesn't make it happen.

The market is adjusting to a different level of creditworthiness following the scarcity of credit and retinence of lender. In the past there were no such retinence, banks would lend to anything with a pulse and increasing prices encouraged property speculation. [barriers to entry were non-existent]

 

i too morally object to shared ownership, it's a wonderful scam to convince us that yes indeed, houses are unaffordable because of all that demand and shortage of supply and other well trotted myths.

 

the way houses drop in value is by a sequence of events, in this case rising defaults on home loans in the US and concerns about the real value of mortgage backed securities helped to ignite a global credit shock which has resulted in a serious tightening of credit ever since, in the wider economy increased job losses, pay freezes and general uncertainty help to put a stopper on the irrational exuberance which occurs during a house price bubble. While each successive house price rise has the effect of reinforcing positive sentiment, each successive decline reinforces negative sentiment. More will wait in the expectation that prices drop further....

 

our housing market blew it's top following the US market which had also peaked/overheated, it's now in the process of trying to revert to long-term affordability, there's some ways to go......it's admirable to want to get on the property ladder.....but prices don't look that cheap if you look at historical trends.

 

Sadly, all you little one's have only ever known is horrendous house price inflation, and with all the property ramping still going on in the meejia there's quite a lot of fear and naivety about the real value of housing.

 

Houses have never gone up during a recession, mortgage approvals need to be considerably higher than where they are at the moment just to stimulate an increase in prices. Why not wait for houses to come down further so that you can afford somewhere half-decent without mortgaging yourself to the hilt. Even the govt. are factoring in an overly optimistic imho 10% of further falls in average house prices....

 

Or if the OP is looking at shared equity because of the lack of suitable deposit, that's surely a clear signal to wait until a sufficiently sized deposit can be raised. Why dance to the tune of this retched govt. and their ridiculous shared ownership schemes.

[amyr]

having just bought my first flat, i can understand about the whole confusion on mortgages/shared ownership etc. I'm lucky that i'm on a fairly decent salary for education so i was able to afford to purchase a flat without having to go into shared ownership. the thing to look out for i found was the estate agents trying to push their own solicitors - i made the mistake of going with the agents own solicitors and they were a nightmare as it was sub contracted to a different firm which pushed up the costs and took even longer as they firm was in Crewe and the flat was in Portsmouth!

 

also, think long and hard about the budget side of things, really look into the finer details of everything and if you don't understand anything on the mortgage side of things ask your mortgage adviser, i was constantly asking mine questions and luckily he preferred it that way as then he knew that I really understood what I was getting myself into.

 

the feeling of owning your own bricks and mortar is second to none. yes i do still have worrys about how i will afford to pay it all back but i have to take it one month at a time and have set everything up on fixed direct debits. this makes it easier for me to budget each month.

 

i have a friend who owns a shared ownership property and she said that if she can buy more shares she will as she doesn't like having to pay rent on top. yet she has a 3 year old apartment which is under warranty, so if anything goes wrong with it structurally she has someone to fall back on.

 

my sister is also now looking into the ownership/shared ownership route and looking at the government home buy schemes etc. there are lots of schemes available to you, just make sure you read all the paperwork you can get your hands on and ask lots of questions. in my area, there are lots of shared ownership events run by the local housing associations where you can go and find out about the various schemes available...why not see if there is one in your area coming up? i think they are normally quarterly round here (Portsmouth).

 

sorry for the long essay, hope it has helped in some way.

[torledo]

Thanks for this. I am currently looking for a house for myself as a first time buyer and hoping to get onto the property ladder.

 

Infact I am off to view a house tomorrow - lets see how it goes. Its the hidden costs into buying a house then I am unsure of.

 

what hidden costs would those be ? There's no mystery to the costs involved in purchasing a home. conveyancing fees, stamp duty [if applicable], mortgage arrangement fees. Then the cost of running the home.....repairs to maintain the property as and when required, council taxes, mortgage repayments, household bills.

 

Going in to buy or make an offer on a property using the traditional method of buying with a desposit and a mortgage from a lender isn't rocket science. Where the misunderstanding comes is in choosing the right mortgage product. Do you fix or get a tracker ? How long do you fix for ? any early repayment or redemption charges how much can you overpay by etc.

 

What would be a good idea is to conduct a little stress test. Would you still be able to meet mortgage repayments if mortgage rates rise by x% above where they currently are for the mortgage product, it's also important to have savings to guard against the risk of extended periods of unemplyment.

 

Even a five-year fix has an element of uncertainty about where interest rates will be five years from now, plus your own personal circumstances could change in five years. That's why low interest rates are only part of the issue around housing affordabilty, the lower the principal cost of a mortgage the better. And clearly it's difficult to see getting anywhere near the level of hpi over the next decade that we've seen over the last 10 years.....so i wouldn't expect anyone to feel safe in sitting on an IO [interest only] mortgage expecting hpi and capital appreciation to come to their rescue in the forceeable future.

 

Rather than buy half a house and then rent the other half, or get tie myself into knots with a 100% mortgage subsidised by the taxpayer, i think i'll bide my time for the 35-40% peak to trough falls and go in with my 25% deposit. That way the whole of the market [within my price range] is open to me and i only have to make one repayment or be concerned about what happens to the value of the property over a period of time. My equity guards me against falls in value, and falls are almost irrelevant me unless i plan on selling.

[Andrew_C]

Probably the biggest advantage to owning your own home may not benefit you directly.

 

If I were to drop dead today, my daughter could sell the house and pocket over £100K after paying off all my debts on it. Or, if I drag on my stay on this mortal coil, I can use the equity in it to pay for some nice nurse to feed me when I'm too old to look after myself. Your pension won't do that for you unless you are putting loads away when young. The other option is a 5 min visit from some contracted-out "care worker" from your health authority (as seen recently in a few fly-on-the-wall documentaries).

 

As my daughter keeps reminding me, I have to be nice to her; she'll choose my nursing home!

[HodgeHi]

One thing you need to be aware of maybe is that when you own half an house,if like my contract with the Hosing assoc. you have to get permissions to make any changes to the house. Anything that changes either the structure or interior needs permission. Now this makes it awkward to actually change anything that you don't like about your new property that you have just spent a fair amount on buying.

 

This to me has ben the biggest downside. Also apparently when you want to purchase the remainder of the share you also have to have it re-valued to.

[grumpy_git]

Renting does put you at the mercy of dodgy landlords; but in the main it's possible to get joy from them with plenty of pestering and waving of contracts, rules etc around.

 

Since moving into my student flat in September we've had plenty of repairs done - the cost must be in the range of thousands - all paid for by the landlord since it's their job to keep the property in good order (aside from obvious vandalism, etc). If the flat were bought, we'd have had to pay all that ourselves.

[torledo]

Probably the biggest advantage to owning your own home may not benefit you directly.

 

If I were to drop dead today, my daughter could sell the house and pocket over £100K after paying off all my debts on it. Or, if I drag on my stay on this mortal coil, I can use the equity in it to pay for some nice nurse to feed me when I'm too old to look after myself. Your pension won't do that for you unless you are putting loads away when young. The other option is a 5 min visit from some contracted-out "care worker" from your health authority (as seen recently in a few fly-on-the-wall documentaries).

 

As my daughter keeps reminding me, I have to be nice to her; she'll choose my nursing home!

 

the problem in recent years is that people have been relying on their properties as pensions, or as cashpoints via mortgage equity withdrawal.

 

Which is fine if you can afford to mew or pay down the mortgage without forcing the kids to sell the property to pay down any debts....but too many people have mew'ed based on the expectation of capital appreciation YoY which would allow them to borrow against the property while maintaing their equity. The myth that house prices only ever go became a consensus among many who were hoodwinked into believing that we'd abolished the boom bust cycle.

 

the concept as property being a suitable replacement for devalued conventional pensions also ecncourage the proliferation of the amateur buy-to-let landlord. Which was possible with zero money down.

 

i'd like to echo the sentiments of another poster, in hoping for a return to properties primarily as homes

rather than investments. Sure they are an investment, but in the long run they don't outperform stocks or bonds as alternate investments. The last 10 years has just been a blip that happens once in a while, but outstayed it's welcome this time... a period of irrational exuberance which gave a false impression as to the real value of property as an investment.

[torledo]

I love it when people say this! How is it throwing your money away?

 

1) You generally pay less rent than you would if you owned the same house and had a mortgage aquired today

 

MB

 

just to add to this, people often make the mistake of comparing mortgage repayments vs rental payments as a cost compariosn. Burden of repairs or maintenance falls on the homeowner which is hard if not impossible to quantify but it adds to the cost burden of owning.

 

Also when you have an oversupply of rental property. As we appear to do, then there's scope to negotiate the rent on a property downward. Whereas it's unlikely that the cost of borrowing for a mortgage is going to get much cheaper from where we are today....at some point the govt. cannot continue to artificially restrain the cost of borrowing. long-term mortgage costs are also often ignored.

 

There is almost certinaly going to be a second leg down to this property crash we're currently going through, a decade long property bubble doesn't unwind in 18 months. It's prudent for those to think long and hard before jumping on the property ladder. Think doubly hard if your not going to end up owning all of the property or are entering into a home purchase with 0 money down as appears to be the case with some of these schemes.

 

Ask yourselves why house prices are so expensive that you can only afford to purchase 25% or 50% ?? for a property that is almost guranteed to be smaller than what some of your parents bought on a single income ?

[titch]

Could anyone clear it up for me.....as a mere tech we we fall under key workers?

[torledo]

Could anyone clear it up for me.....as a mere tech we we fall under key workers?

 

hi titch. only just revisited this thread....no i don't believe support workers such as school techs are classed as key workers. there may be some exceptions to that, i don't know for sure. But i'm pretty sure we don't fall under the category of key worker.

 

hopefully it'll become irrelevant now anyway as far as home ownership schemes, the govt. assisted home buyer schemes should be available to ftb's [that's first time buyers] in general if you really want to go down that route. Alternatively, keep saving, keep putting some money away every month, and wait it out. If history is any judge this decline in property prices has perhaps got some way to go to be in line with long-term trends and average income ratios....even then it could overshoot on the downward slope. as in the last crash.

 

Anyone who talks about now being a good time to 'get on the property ladder' is presumably unaware that at the moment the so-called ladder looks more like a property snake[what it really is is a pyramid but that's another thread entirely]. That's not to say you defintely shouldn't buy, in some cases it may make sense...it depends very much on individual circumstances. always has done. But it's not a hard and fast rule to 'buy now'. Important to go in to these transactions with your eyes open, too many ftb's between 2003 and 2007 got carried away by the incessant ramping and fear factor...and that's an understatement.

 

What would be an alternative if one is unsure about the details of some of these schemes would be to have parents who can assist with a deposit and to go down the traditonal home buying route. these types of 'assisted ftb's' are nowadays the norm rather than the exception....., but even at reduced values for many on low to moderate incomes it's the only feasible option to raise sufficient cash.