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Deferred Cost Of Ownership

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Any one else seen this..it caught my eye today but smacks of desperation if you ask me.

Basically the scheme works like this:

The house 'costs' £139,950

The buyer purchases the property for £111,960 NOW


It isn't shared ownership...it is a deferred balance payment which must be met.

So basically the buyer is locked into the full 'cost' of the property even though they can't afford it and will be paying the additional balance in a falling market.

Would any one actually fall for this?

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of all the hair brained schemes this is the worst.

instead of reducing the price to meet market demand, they defer the overb,own price like they are doing the buyer a favour.


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Unless the developer has a very close relationship with a lender then this will not work. When the buyer exchanges/completes lenders insist on seeing evidence of the deposit, 100% mortgages are practically dead at the moment. The big fear for all lenders, whether using securitised money or not, is truck loads of bad debts coming out of 100%/100%+ mortgages.

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I think the problem is that the lenders are in with the builders on this and really think they can pull this off, by making sure house prices never fall. The banks have largely mangaged over the last decade, as there have been no shortage of buyers. Now the trick becomes more difficult to pull. So the builders are getting in on the act too - all hands to the pumps.

These schemes have been being offered for 6 months now, so people must be going for them. But they are such a glaringly bad idea, that it makes me wonder exactly who they are.

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  • 338 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%

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