Part owned homes - whats the deal!?

Found 6th Jul 2008
Me and my partner are looking to buy our first home.

We cant raise enough deposit that is required to purchase our first home so therefore both living at parents. We have been looking at these part buy schemes, where we take a morgage on for say 75% and the building company pay the other 25%.

All seems good but i'm never any good with the terms and conditions and just wondered if any of you guys knew the pros and cons of them? Heres some examples:

barratthomes.co.uk/cam…spx

dwh.co.uk/eas…art

georgewimpey.co.uk/Hom…fer

We are thinking of using the current market to barter with the companies to lower the prices down.

I know some will probably say i'd wait a few more months as prices are falling, but i've been told that every month for a year now and to be honest, there comes a time when you have to have your own space.

Hope you can help Many thanks for your time. I do apprieicate it.

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looks good to me!! makes me wish i was a first time buyer! guess it is similar to the ones run locally t me but they paid part mortgage part rent. Good luck!

Yes definetly a good idea to barter. I visit a lot of new build sites through my work and more and more are just shutting down and stopping building as they aren't selling. Friend of mine got a £238K new house for £190K, a saving of almost £50K amazing. If you don't ask, you don't get :-D

One of my clients at work is a housebuilder, and I've been doing lots of work on the shared equity schemes.

They seem an excellent idea to me, and a great way of buying a home.

You buy the house for 75% of the market, and the housebuilder retains the other 25% of the equity. You then don't have to pay the 25% back to them until you've lived there for 10 years, or you decide to move (whicheve comes first) - the 25% you pack back is 25% of the house price at the time of sale/after 10 years though.

I've yet to find any cons to this scheme - it is a money maker for the housebuilder, but it also seems a good deal for the buyer.

cant seem to find when you pay the rest off and how? or do they expect you can take more mortgage within 10 years? will interest accumulate on the unpaid %?

louloo;2466410

looks good to me!! makes me wish i was a first time buyer! guess it is … looks good to me!! makes me wish i was a first time buyer! guess it is similar to the ones run locally t me but they paid part mortgage part rent. Good luck!



Its not just for First Time Buyers, although most housebuilders only seem to be running the scheme on smaller homes / apartments :thumbsup:

Supermod

You may still have to pay rent on the part that you dont own.
Also, when you come to sell it, you will owe the other party all of their share, will you then be able to afford to pay off your mortgage (with interest) in the current climate and not get into negative equity? You need to make sure you look into this thoroughly. Which obviously you will, just warning of the consequences...

midlandscomics;2466438

One of my clients at work is a housebuilder, and I've been doing lots of … One of my clients at work is a housebuilder, and I've been doing lots of work on the shared equity schemes. They seem an excellent idea to me, and a great way of buying a home.You buy the house for 75% of the market, and the housebuilder retains the other 25% of the equity. You then don't have to pay the 25% back to them until you've lived there for 10 years, or you decide to move (whicheve comes first) - the 25% you pack back is 25% of the house price at the time of sale/after 10 years though.I've yet to find any cons to this scheme - it is a money maker for the housebuilder, but it also seems a good deal for the buyer.



oh right so 25% of the value later..

magicjay1986;2466450

You may still have to pay rent on the part that you dont own. Also, when … You may still have to pay rent on the part that you dont own. Also, when you come to sell it, you will owe the other party all of their share, will you then be able to afford to pay off your mortgage (with interest) in the current climate and not get into negative equity? You need to make sure you look into this thoroughly. Which obviously you will, just warning of the consequences...



says no rent??

midlandscomics;2466447

Its not just for First Time Buyers, although most housebuilders only seem … Its not just for First Time Buyers, although most housebuilders only seem to be running the scheme on smaller homes / apartments :thumbsup:



seems good to me! i know someone could benefit from it! o/h says nephew just used it to buy.

Original Poster

Fast posts, keep them coming!

I remember some sales guy telling me though that the price could not be reduced on a 75/25 scheme. It was something like a £240,000 house for the £160,000 with the scheme but ideally, i only want a morgage of say £140,000. Surely I could still barter with them?!

louloo;2466453

oh right so 25% of the value later..



Yes, that's why the housebuilders are doing it.

You buy a £100k home for £75k now (builder pays the other £25k)

Then you sell for £150k, and have to repay the builder £32.5k

louloo;2466459

says no rent??



Yep, no rent or interest to pay

I'm no expert in this field but here are my 2 cents...

You've already waited a year, so what's the harm in waiting a little longer?
Now that you are aware of the housing market spiralling downwards with no sign of picking up in the v.near future.

If you need your own space, perhaps you should rent a flat for a short while and then buy your own place when you get a good deal. Depending on your location, the amount you would have paid in rent would be less than the mortgage (the interest part) you paid for that duration.

Btw, what area are you looking at to buy your home?

woz;2466476

Fast posts, keep them coming! I remember some sales guy telling me though … Fast posts, keep them coming! I remember some sales guy telling me though that the price could not be reduced on a 75/25 scheme. It was something like a £240,000 house for the £160,000 with the scheme but ideally, i only want a morgage of say £140,000. Surely I could still barter with them?!



I don't know if they'll give you any discounts on the price, but you might get them to pay stamp duty, free carpets etc.

Original Poster

magicjay1986;2466450

You may still have to pay rent on the part that you dont own. Also, when … You may still have to pay rent on the part that you dont own. Also, when you come to sell it, you will owe the other party all of their share, will you then be able to afford to pay off your mortgage (with interest) in the current climate and not get into negative equity? You need to make sure you look into this thoroughly. Which obviously you will, just warning of the consequences...



So obviously we have to pay the 25% back but what happens if we come to sell the house and the value has dropped, would we have to pay them 25% of the current house value or pay them back atleast the 25% they invested at the time?

I noticed it had to be paid within 10 years....now I would be paying towards the 75% morgage anyway but finding the other 25% in ten years could be tricky - dont you think? Do we have to go through their morgage lenders? Could I start paying them back before I start paying the 75%?

Thanks for the posts so far!

woz;2466530

So obviously we have to pay the 25% back but what happens if we come to … So obviously we have to pay the 25% back but what happens if we come to sell the house and the value has dropped, would we have to pay them 25% of the current house value or pay them back atleast the 25% they invested at the time? I noticed it had to be paid within 10 years....now I would be paying towards the 75% morgage anyway but finding the other 25% in ten years could be tricky - dont you think? Do we have to go through their morgage lenders? Could I start paying them back before I start paying the 75%? Thanks for the posts so far!



It would be 25% of the value at the time of sale, so if prices have dropped further, you would pay back even less.

I believe you have to go through one of their approved mortgage lenders - only certain Building Societies are offering 100% mortgages on the 75% - the others only offer 85-90% of the 75% (if you see what I mean).

Give me a min - I think I've got some of the info on my laptop, so will have a read through and let you know all the details

Original Poster

midlandscomics;2466546

It would be 25% of the value at the time of sale, so if prices have … It would be 25% of the value at the time of sale, so if prices have dropped further, you would pay back even less.I believe you have to go through one of their approved mortgage lenders - only certain Building Societies are offering 100% mortgages on the 75% - the others only offer 85-90% of the 75% (if you see what I mean).Give me a min - I think I've got some of the info on my laptop, so will have a read through and let you know all the details



Thank you

woz;2466530

So obviously we have to pay the 25% back but what happens if we come to … So obviously we have to pay the 25% back but what happens if we come to sell the house and the value has dropped, would we have to pay them 25% of the current house value or pay them back atleast the 25% they invested at the time? I noticed it had to be paid within 10 years....now I would be paying towards the 75% morgage anyway but finding the other 25% in ten years could be tricky - dont you think? Do we have to go through their morgage lenders? Could I start paying them back before I start paying the 75%? Thanks for the posts so far!



It all depends on the scheme but you won't normally have to go through their lenders. They take the risk if house prices fall so you only pay back 25% of the current market value. Don't wait....house prices will never crash like the 80's, we're going through a small recession due to a number of factors and prices will start shooting up again in a couple of years. Buy now.....it's a buyers market at the moment.

Supermod

Ahhh...you dont pay rent for the first 10 years. You would hope though that in those first 10 years the market doesnt crash hugely.
It seems a very good idea.
If you need help with the legal work, give me a PM.

Right, had aread through, and found the following:

* You can have a larger share (i.e. 85/15), but the minimum you can have from the housebuilder is £25k
* It seems, that you can get your mortgage from whoever, but if you go with the housebuilders approved lenders, you will get 100% mortgage on the 75%
* It does seem (at least with my housebuilder client) you have to pay a £500 'commitment fee' for the scheme

If you need any more info, let me know and I'll try and find out for you when I'm back at work tomorrow.

Original Poster

choc1969;2466561

It all depends on the scheme but you won't normally have to go through … It all depends on the scheme but you won't normally have to go through their lenders. They take the risk if house prices fall so you only pay back 25% of the current market value. Don't wait....house prices will never crash like the 80's, we're going through a small recession due to a number of factors and prices will start shooting up again in a couple of years. Buy now.....it's a buyers market at the moment.



Thats how i'm thinking, its ok people saying i'd wait a bit longer but seriously how long do you wait before its a good deal.

I was told that house prices rise and fall all the time but over a period of ten years the property is likely to have risen, even if its not a lot.

I'm kinda seeing it like this at the moment:

We'd own 75% of the house (100% they say)
They'd pay the 25% deposit
If the house price rises then they just take the 25% of the value that it is worth then but i'd also see profit as my 75% share should have also risen. That right?

woz;2466605

Thats how i'm thinking, its ok people saying i'd wait a bit longer but … Thats how i'm thinking, its ok people saying i'd wait a bit longer but seriously how long do you wait before its a good deal. I was told that house prices rise and fall all the time but over a period of ten years the property is likely to have risen, even if its not a lot. I'm kinda seeing it like this at the moment:We'd own 75% of the house (100% they say)They'd pay the 25% depositIf the house price rises then they just take the 25% of the value that it is worth then but i'd also see profit as my 75% share should have also risen. That right?



Spot on :thumbsup:

The only downside that I can see is that when you come to sell, you'll only have 75% of the value of your house, to put towards 100% of the value of a new one (if you can't do shared equity on your next house)

midlandscomics;2466629

The only downside that I can see is that when you come to sell, you'll … The only downside that I can see is that when you come to sell, you'll only have 75% of the value of your house, to put towards 100% of the value of a new one (if you can't do shared equity on your next house)



better to be in that position then in no position at all.....;-)

Supermod

woz;2466605

Thats how i'm thinking, its ok people saying i'd wait a bit longer but … Thats how i'm thinking, its ok people saying i'd wait a bit longer but seriously how long do you wait before its a good deal. I was told that house prices rise and fall all the time but over a period of ten years the property is likely to have risen, even if its not a lot. I'm kinda seeing it like this at the moment:We'd own 75% of the house (100% they say)They'd pay the 25% depositIf the house price rises then they just take the 25% of the value that it is worth then but i'd also see profit as my 75% share should have also risen. That right?



Yes...but also consider if the house prices dont rise.

Banned

I personally dont think its a good time to be buying, the housing market cannot possibly go up so hanging on a wee while maybe better, these deals are out there because they cannot shift them, not because they want to help out first time buyers

choc1969;2466636

better to be in that position then in no position at all.....;-)



Agree 110% - so glad I bought my first house when I did - so many of my friends can't afford to buy, even with the prices dropping now.

This is another scheme that's worth checking out:

homebuy.co.uk/

Its a government funded scheme (mainly for keyworkers, but is also for first time buyers) which most housebuilders are now offering. Website says SE England, but it does cover the whole of the country now, as far as I'm aware

Original Poster

So overall a good deal.

Thank you for the posts, its very good of you! I'll rep

magicjay1986;2466651

Yes...but also consider if the house prices dont rise.



But it's better to lose money of 75% of the price rather than 100% of it :thumbsup:

Supermod

midlandscomics;2466714

But it's better to lose money of 75% of the price rather than 100% of it … But it's better to lose money of 75% of the price rather than 100% of it :thumbsup:



...yeah....but id rather not lose money at all on my first house purchase. Id rather sit tight and watch the market closely.

sassie;2466658

I personally dont think its a good time to be buying, the housing market … I personally dont think its a good time to be buying, the housing market cannot possibly go up so hanging on a wee while maybe better, these deals are out there because they cannot shift them, not because they want to help out first time buyers



The main reason that First Time Buyers are now struggling is because of the problems getting mortgages (especially now that most lenders are only offering 85% mortgages). I agree, the market is dead, but if the lenders started making things a little easier I think you'd see things starting to move again.

Banned

The market will start to fall and ide rather sit and watch a wee while longer, but whatever you decide good luck and best wishes to you both x

magicjay1986;2466722

...yeah....but id rather not lose money at all on my first house … ...yeah....but id rather not lose money at all on my first house purchase. Id rather sit tight and watch the market closely.



This is the main problem though - too many people see buying a house as an investment. At the end of the day, it's a home for you and your family.

Banned

midlandscomics;2466735

The main reason that First Time Buyers are now struggling is because of … The main reason that First Time Buyers are now struggling is because of the problems getting mortgages (especially now that most lenders are only offering 85% mortgages). I agree, the market is dead, but if the lenders started making things a little easier I think you'd see things starting to move again.



Most first time buyers cannot afford the repayments of an 85% mortgage on the housing costs, the market has to drop, round my area there is nothing reasonable for first time buyers under £130.000 your looking at people paying £1.000 per month on a mortgage on buying a decent property

Supermod

sassie;2466770

Most first time buyers cannot afford the repayments of an 85% mortgage on … Most first time buyers cannot afford the repayments of an 85% mortgage on the housing costs, the market has to drop, round my area there is nothing reasonable for first time buyers under £130.000 your looking at people paying £1.000 per month on a mortgage on buying a decent property



I dont think that market can drop any lower than it already has considering the rich times we live in. The market at the moment is dead.

sassie;2466770

Most first time buyers cannot afford the repayments of an 85% mortgage on … Most first time buyers cannot afford the repayments of an 85% mortgage on the housing costs, the market has to drop, round my area there is nothing reasonable for first time buyers under £130.000 your looking at people paying £1.000 per month on a mortgage on buying a decent property



I agree completely, it's the same by me.

Until interest rates drop by quite a bit more, I can't see there being much change.

Original Poster

magicjay1986;2466789

I dont think that market can drop any lower than it already has … I dont think that market can drop any lower than it already has considering the rich times we live in. The market at the moment is dead.



I agree. Realisticly I do not think it will drop a really big amount in the next 6 months

Supermod

woz;2466804

I agree. Realisticly I do not think it will drop a really big amount in … I agree. Realisticly I do not think it will drop a really big amount in the next 6 months



Definitely. I think that people who own palatial properties will keep the market going until people can afford to first time buy.

magicjay1986;2466789

I dont think that market can drop any lower than it already has … I dont think that market can drop any lower than it already has considering the rich times we live in. The market at the moment is dead.



While the market is dead, prices will continue to fall. And until interest rates are lowered, the majority wont buy.

magicjay1986;2466812

Definitely. I think that people who own palatial properties will keep the … Definitely. I think that people who own palatial properties will keep the market going until people can afford to first time buy.



It's the larger properties that aren't selling. There is a little movement in smaller properties (as there is a higher demand), but no one wants to take a chance on bigger houses at the moment
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