Shared ownership mortgages and buying process

[PostHeads123]

A relative wants to buy a shared ownership place, I only know the basics about shared ownership, but can just a regular mortgage company provider be used, for example I see Leeds BS do shared ownership mortgages or is there some different process ? The relative told me she had been directed to some firm who specialises in shared ownership mortgages, they look like a broker though and they seem to charge the customer a fee as well, some of the initial questions they ask on 'online assessment', were health related like ones you would expect for life insurance, not a mortgage.

Thanks

[mikef]

That doesn’t sound right, and in fact slightly dodgy

Does your relative have a solicitor specialising in shared ownership purchase? My daughter just went through her shared ownership purchase and used a specialist solicitor, who were very efficient and affordable

E J WINTER & SON LLP
0118 957 4424
www.ejwinter.co.uk

One Forbury Square
Reading
Berkshire
RG1 3BB
United Kingdom

[greengreenwood7]

depending on the type of shared ownership, just be aware of 1 detail that is not always clear: and that is that when selling in however many years time, the managing agent/developer has the only right to market the property; so an owner often can;'t just instruct a local estate agent, they have to allow the managing agent to try for however long.

also....if its part of an ongoing development your pal might want to think about how many properties may be built over coming phases. our daughter got lucky, she'd bought a flat on shared ownership and then watched as more developments sprang up, so in the end she was selling a 4 year old flat vs a brand new one; given that the criteria for S/O is strict, that limits the number of potential buyers; anyways, first time around she tried for a cple mths to sell without success and then tried again 9-10mths later and did get it sold.

no idea on the mortage side, so sorry for wandering into other areas

[Truckosaurus]

My flat was originally a shared ownership one. Not all lenders will offer mortgages on them, I went through a broker who offered several different options and the one I went with was at a similar rate to a 'normal' mortgage. (Interestingly, on the subject of fees, they treated advising shared ownership clients as pro-bono as a giveback by the owner of the brokerage - although they probably got a commission or something from selling the mortgage?)

I now own 100% of the property and found when I was buying the remaining part that there weren't many solicitors who would do the conveyancing (the original local firm that did it the first time had been sold and no longer did it).

[bennno]

As a rule, leasehold properties are cheap to buy but can be awfully expensive for tenants, especially if they aren’t new and under guarantee.

Mix in shared ownership and it’s worse, can be restricted mortgage availability as you note, can be restricted at sale, value appreciation may be less as a result (mix in social housing and x10), worst of all you generally pay high rent to the co-owner and fund a mortgage on your share, whilst being personally liable for 100% of all the service charges, ground rent and s20 claims, when you sell the shared ownership provider takes their full % of growth. It’s really the absolute worst of all worlds.

[mikef]

PH at it's finest - OP asks about mortgage borrowing and gets a bunch of "you don't want to buy that" answers, based on negatives that (probably) won't apply to the property in question - although they might, so it's worth thoroughly checking details (like costs of other similar properties in the area, how long the developer has first refusal in the event of resale, length of lease (should be 200 years +), rents and management fees, any other restrictions)

Where it could be dodgy is if they are promoting a single lender who will lend at an unrealistic valuation, which would not pass other lenders' criteria

Edited by mikef on Friday 11th April 09:46

[bennno]

mikef said:

PH at it's finest - OP asks about mortgage borrowing and gets a bunch of "you don't want to buy that" answers, based on negatives that (probably) won't apply to the property in question - although they might, so it's worth thoroughly checking details (like costs of other similar properties in the area, how long the developer has first refusal in the event of resale, rents and management fees, any other restrictions)

Where it could be dodgy is if they are promoting a single lender who will lend at an unrealistic valuation, which would not pass other lenders' criteria

Im not sure which negatives probably wont apply, we know a few in shared ownership and all of the below are consistent:

- If leasehold then the shared ownership owner is liable for 100% ground rent, service charges and any s20 payments (e.g. high value repairs).
- Resale restrictions (low income / essential worker restriction) are likely to apply for x years and should be carefully checked, they limit ability to sell and future value.
- Mortgages can be more expensive as its a specialist market
- On resale you only get back an equivalent % of any uplift
- You have only part of the benefit of ownership, with few of the benefits of renting (e.g. liability for ground rent, service charges, s20 bills)

[mikef]

Believe me, in London there are no benefits to renting unless you are on the run. New-build shared ownership schemes are likely to have terms that favour the buyer much more than in the past, come with long leases (typically 250 years), and importantly are likely to actually work out cheaper per month than renting an equivalent property (we looked at that in detail)

[dalenorth]

Yes they will be a broker as most housing associations work with one. The health questions will be to tee up life and income protection sales so make sure they are not selling loaded premiums.

Most brokers charge a fee which is fair as shares ownership isn’t easy work for the broker in honesty.

There is a London based firm called Clark Marshall who we have worked with for 12 years who are brilliant if they can use someone else.

[Colonel Cupcake]

We went with Leeds Building Society for our shared ownership mortgage and nearly lost our house. Endless requests for documents they already had, long delays inbetween and then changing the amount they would lend for no discernable reason. Six months fannying around.

We went to Nationwide Building Society and had our mortgage sorted within a month.

That was 10 years ago but I would urge anyone using Leeds to have a backup plan.

[dirky dirk]

I wouldn’t want one of my family caught up in a shared equity house.
Two people I know have them and they both regret it.
Very hard to get out of.

They are usually the tiniest of things in a new build estate so they can get planning permission.

I’d be looking for a cheaper property rather than one of those

[Killer2005]

Colonel Cupcake said:

We went with Leeds Building Society for our shared ownership mortgage and nearly lost our house. Endless requests for documents they already had, long delays inbetween and then changing the amount they would lend for no discernable reason. Six months fannying around.

We went to Nationwide Building Society and had our mortgage sorted within a month.

That was 10 years ago but I would urge anyone using Leeds to have a backup plan.

Leeds aren't that type of lender, my mortgage is with them. There will have been reasons behind it, potentially ones you may not have been told about.

[Colonel Cupcake]

Killer2005 said:

Colonel Cupcake said:

We went with Leeds Building Society for our shared ownership mortgage and nearly lost our house. Endless requests for documents they already had, long delays inbetween and then changing the amount they would lend for no discernable reason. Six months fannying around.

We went to Nationwide Building Society and had our mortgage sorted within a month.

That was 10 years ago but I would urge anyone using Leeds to have a backup plan.

Leeds aren't that type of lender, my mortgage is with them. There will have been reasons behind it, potentially ones you may not have been told about.

What 'type' of lender?

We made it clear that the mortgage was for a shared ownership right from the off. Why not say that they don't do that kind of thing, instead of pissing people about for 6 months?

[Sarnie]

Colonel Cupcake said:

Killer2005 said:

Colonel Cupcake said:

We went with Leeds Building Society for our shared ownership mortgage and nearly lost our house. Endless requests for documents they already had, long delays inbetween and then changing the amount they would lend for no discernable reason. Six months fannying around.

We went to Nationwide Building Society and had our mortgage sorted within a month.

That was 10 years ago but I would urge anyone using Leeds to have a backup plan.

Leeds aren't that type of lender, my mortgage is with them. There will have been reasons behind it, potentially ones you may not have been told about.

What 'type' of lender?

We made it clear that the mortgage was for a shared ownership right from the off. Why not say that they don't do that kind of thing, instead of pissing people about for 6 months?

Leeds BS are one of the biggest Shared Ownership lenders in the UK.........