Shared ownership - Worth it?

[Berserker]

meaning your rate not the banks rate, fix in on top of the banks rate.

If you'd said that at the start, you'd have saved me a post. This I agree with.

again why not ever go for a IO mortgage? saving the equivalent of difference between IO and repayment each month should give you plenty of savings for when you need to pay up.

If I were to take the difference between a repayment mortgage and an IO mortgage and stuff it under a mattress every month, I'd be in for a nasty shock at the end. The 'savings' simply wouldn't repay the mortgage.

The reason for that is simple. As you repay a mortgage, the interest bearing portion decreases, so you pay more off the balance with the same monthly payment.

Taking the above into account, there are two flaws to your argument:

• You need some form of investment vehicle to make up the gap between the IO and repayment balance. That implies risk. Just ask anyone who got themselves an endowment mortgage in the early 90s - or, more recently, put their savings into an Icelandic bank.
• In the absence of the investment vehicle, an IO mortgage simply works out more expensive.

 

[mattheman]

If you'd said that at the start, you'd have saved me a post. This I agree with.


If I were to take the difference between a repayment mortgage and an IO mortgage and stuff it under a mattress every month, I'd be in for a nasty shock at the end. The 'savings' simply wouldn't repay the mortgage.

The reason for that is simple. As you repay a mortgage, the interest bearing portion decreases, so you pay more off the balance with the same monthly payment.

Taking the above into account, there are two flaws to your argument:

• You need some form of investment vehicle to make up the gap between the IO and repayment balance. That implies risk. Just ask anyone who got themselves an endowment mortgage in the early 90s - or, more recently, put their savings into an Icelandic bank.
• In the absence of the investment vehicle, an IO mortgage simply works out more expensive.

People dont see that, so many in 10/20 years are going to be in for a shock. when the IO comes to an end the fools will either take out another IO or repayment thus paying much more.

 

[Mr-White]

This is no different than any properties though. If you are saying there is a higher chance of having scum move in next to you, do you have any proof of this? I think it is scaremongering.

Exactly, it depends on the developers, but then as a buyer you would be mad to buy a **** new build anyway. Shared ownership or not, you dont buy something that is crap.

I was talking more about new builds, buying in an already populated area you'll get more of a feel of the neighborhood.

MW

 

[Morba]

If I were to take the difference between a repayment mortgage and an IO mortgage and stuff it under a mattress every month,

I didnt say stick it under the mattress..

 

[helpimcrap]

Shared-ownership makes home ownership more affordable because you can part buy and part rent your home, does this mean that you pay the initial share and pay rent every month until you eventually buy more share as you earn?

What are your thoughts on this? Would it be a good thing to be invest in? I was checking out some 2 bedrooms flats down at Docklands in London with river view would cost around £50,000 or less with shared ownership scheme. The flat is considerably big and new as well.

Anyone could shed some light on this?

I've been looking into buying a house outright but would be interested to hea your findings really regarding the possibility. i gather from this thread most people don't agree with it but as i can't get a 100k mortgage i'd like see what you find out.

 

[Berserker]

I didnt say stick it under the mattress..

No, you didn't, so you're taking a risk instead (though even stuffing it in your mattress is a risk it seems).

PS - in my case, I started out IO in the early 90s but switched it within a few years. Glad I did - government rule changes made a decade later would have rendered my investment totally unusable. I'd have to have started repayment with over half the mortgage term gone already, or extended the term by at least five years to make up the shortfall. Not a good situation at all and shows the risk you take with IO.

 

[borich_planner]

Ok guys,

I am in a two bed new build key worker rented flat, its £420 a month with a car port at ground level. All 3 neighbours in my block are key workers. However they is a difference between Social rented and affordable housing. You don't get people on benefits moving in next to you etc. It can be a good thing if you get somewhere which won't go in value, else you could be stuck there for years

If you haven't got a deposit it can be good way forward. Myself I would not go for one as I have a deposit and will buy once I settle somewhere.

I am a planner for a local authority, so if anyone wants any advice on the issue of affordable housing and the differences etc feel free to get into contact.

Borich

 

[Berserker]

I think key worker housing is a lot different from that which is available to the public at large. Key worker is effectively subsidised by the Government, and you wouldn't expect them to 'go bad' on you like some of the less scrupulous private landowners can.