Anyone bought a house through shared equity? Pros/cons?

[mrsraggle]

I don't know much about shared equity but am considering it as an option for us to move.

Our house is in negative equity since the recession but is becoming far too small for the three of us and I'm desperate to move. We could potentially save/borrow £5-7k for a deposit (about 5% of the houses around here) rather than £10-14k (which would be 10%) which is what's lead me to looking at shared equity.

Does anyone have any experience. How does it work, and what are the pros/cons?

 

[HCB]

I haven't done this myself but as far as I'm aware you basically buy a portion of the house, say between 50% and 75% depending on what the housing company you are buying from offers. You will then need a deposit and mortgage or other means of buying that portion and then you pay rent on the rest, i.e. the part that the company still owns. Obviously, when you go to sell it you will only be owed your portion and the housing company the rest.

Exact terms and conditions will be different from company to company. Some companies or developments only offer this to first time buyers for example. Also, they charge different amounts of rent on their portion.

The only thing I would watch out for is that the total mortgage payments and rent combined can be more than what just a mortgage would be so you might find yourself worse off each month, especially if you are able to get a reasonable mortgage anyway. I also don't think that you can get a mortgage as easily and may have to go through certain mortgage providers or brokers for this restricting what mortgage you can get, although I could be wrong on this.

Be careful on the deposit front too as things have changed with everything that has been going on over the last couple of years and banks, etc, were needing deposits of 25% not just the usual 5% or 10% we were used to. It may well have eased off a bit now but it's something to be aware of.

The best thing to do might be to find developments near you or where you would like to move to that have a shared ownership scheme and find out from them what they off and what they require, etc.

 

[Mumtobe20]

I have bought a house through link shared equity scheme. As the person has stated above you basically buy so much and the government own the rest. For example in my case we own 70 percent and the government own 30 percent. In my situation no deposit was required. You have the choice to buy back the percentage that the government owns in the future. If You choose not to pay them back when you sell the property you give them back what your owe them. Its a great scheme and as a first time buyer myself I would not have been able to get on the property ladder if it was'nt for this scheme. Hope that helped

 

[MrsBop]

It is something we're considering for the future but I have a read a few negatives such as when you do decide to sell you often have to offer it to the other party 1st who would give you a much lower price. Most of the advice I have read is to go into it with your eyes wide open. xx