shared ownerships are they worth it?

[cuddleMe]

hi, im thinking its time to take my first step on the property ladder! but now u know the house prices are really high (although its going down again) but it is stil unaffordable to get a mortgage.

i came across with this Shared ownership scheme (which supposly ideal for FTB) where you own part of the property, lets say 50% of it. and your landlord will own the other half. you pay rent for the other half and (i think) you pay the remaining 50% of what ever you borrowed (mortgage). Does this mean that you are only getting 50% mortgage of the market value of the property, but litterly you r getting 100% mortgage, but the landllord-as a secuirty (gauranter) is paying the other half? I'm really confuse how this work? can someone explain abit more to me? the more i think about it the more dodgy it gets because if i end up paying rent and mortgage wouldnt i b paying loads a month?

the scheme also alows you to buy the other share of the property outright after 12 months and then u will end up owning the whole of the property.

am i on the right lines????

[littlefatman]

There's nothing wrong with shared ownership schemes: they are usually operated by local authorities or Housing Association with Government backing. You will own 50% of the house and mortgage the part which you own. The part which you own is sold to you on the basis of a long lease-like how it would be if you owned a flat- again nothing wrong with that. You then pay rent to the Housing Association for the other 50% (which they retain) and that rent is usually reviewed each year. Usually you can "staircase" which means that you can purchase tranches (25% plus normally) until you own the property outright.
There are a couple of legal issues. Firstly, if the lease is new then you will generally pay stamp duty on the whole value of the property (not the 50% that you are buying). Therefore if the 50% value is �100k then you will be billed by your lawyer for stamp duty in the sum of �2k. Secondly, if the lease is older then a lot of them do not include mortgagee protection clauses. This means that those lease are only acceptable to one or two mortgagees (I reitereate this only applies to some older lease). Naturally this limits the marketability of the home when you come to resell. I see shared ownership leases all the time, and there is a market for them. You need to check what the rent is on the 50% being retained by the Housing Association and ask them if there are any further charges (There may be a nominal ground rent and if the home is a flat then there will probably be service charges also).

[Nik315]

Hi cuddleMe,

I currently live in a shared ownership house so I can give you a rough outline of how it works with the housing association I am with.
You decide first of all how much of the property you can afford between 25 and 75%, subject to agreement by them obviously, you then secure a mortgage, say for example for 50% of the market value of the house. The owner ( usually a housing association ) owns the rest of the property and you then are responsible for paying them rent for their share.
This can work out cheaper than renting depending upon the rent set out by the owner. I certainly saved about �150 per month as opposed to renting in my area.
After a certain amount of time you are then able to purchase more of the property from the owner and then your rent would subsequently be less.
I think shared ownership is a marvellous idea for people that simply cannot afford to get on to the housing ladder, certainly helped us!

[cuddleMe]

wow thank you very much for your advice 'little' and 'nik' i wil deffo look into it :) xxxxxxxx

[MK66]

I work for a housing association in Milton Keynes - we are regulated by the Housing Corporation. I've posted a link to their website - just to confirm others' advice really!
http://www.housingcorp.gov.uk/server/show/conW ebDoc.967

[hammerman]

I'm a shared ownership person too.

One thing is you might have problems getting a mortgage with SO. I got mine with Halifax some 10 years ago now but no other bank would touch me.

Good luck

[SRH]

Further to these answers, I got a mortgage through Nationwide for shared ownership. The rent you pay on the bit you don't own is dead money, but it's less than a full mortgage. It was the only way I could get on the ladder - and I live in a �100k flat while paying out for a �75k mortgage (noone would lend me �100k) - but my rent and management fees are �150 a month, which is a bit gutting. But it was the only way to buy my own place.