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mikeymadman

Housing Association Trying To Force Debt On Me!

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For lots of reasons, none of which are particularly good and which I'm sure most of the people here would give me a properly earned "doing" for, I decided to give in and put in an offer for a 30% shared ownership flat. (I won't bore you with my excuses, but I have a list of them...).

I would freely admit that while I wouldn't be able to buy the whole thing, buying 30% certainly would not stretch me and I'd be aiming to pay off the mortgage in 7-8 years. I do believe that house prices will go down, but if only liable to suffer just under a third of the drop myself I'm willing to pay that price to have the benefit of somewhere stable to live where I can put what I like on the walls...

My offer was accepted, and I got my mortgage offer...

... but from a phone call today it looks like the Housing Association is going to turn me down. They want me to take on property expenses that are between 30-45% of my net income based on the cost using a mortgage for the shorter of 20 years or until retirement, and what I'm proposing to do would be a bit under 30%. For me what I'm proposing to take on seems like a sensible amount; at the moment I have a slightly better salary than I'd get if I had to look for a new job tomorrow, and at the moment I also don't have any motoring expenses which could very easily not be the case if I had to change job.

They also want this to be the expense after I've used almost all my savings on the deposit, and feel that keeping as savings what would (after moving and related expenses) would be about 6 months expenditure shows I don't really need help. It seems sensible to me, and I'm sure I've read a government report criticising feckless people for not keeping 6 months income as savings, but to them it shows that I'm too rich for shared ownership.

Further, the affordability calculation used by the mortgage company shows that I couldn't afford to buy the whole place (and I agree with them; I can't).

Obviously I'm not going to argue too hard. They're probably doing me a favour, and additionally I don't want to buy something that I wouldn't be able to sell because they'd turn down all my buyers.

For reference purposes, and to show just how out of keeping the government is with reality; for the property to cost between 30% and 45% of earnings you would be earning between £16,080 and £27,100pa. To meet the affordability calculation the mortgage company used (admittedly for the very cheapest interest rate on the shared ownership mortgage market) you'd have to be earning £25,735 (and this was based on my not having a car). So the poor couple trying to sell the place (and I don't doubt that they truly are trying to sell it because the place might have been big enough for two of them before there was a baby as well; they probably want to move very quickly) are looking for a buyer with an income in the range £25,736 to £27,100pa.

Good luck to them.

For me, the Housing Association's solution is that I should buy a share of a bigger property that I definitely couldn't afford and that would raise the expense to between 30 & 45% of my net income. No wonder there was an article recently saying that people who increase their share of shared ownership properties are almost as rare as hen's teeth.

Edited by mikeymadman

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Are you certain you would in fact only be liable for 30% of any property price falls? The last time I looked at SO that was not the case.

You were definitely liable for 100% of the maintenance and some times more (shared areas not looked after by the council)!

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Yes, this was one of the old style shared ownership schemes and not one of the more recent "Help to Buynkruptcy" style schemes :-)

Bizarrely I had a look at the next most expensive shared ownership property for sale in the area. It's with a different Housing Association, and their limit is the opposite; that the housing expense must not exceed 30% of net income. So they'd also turn me down; on the basis that I should be looking for something cheaper.

Edited by mikeymadman

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Good luck with it mikey. :)

I've been looking at Shared Ownership recently and have registered with Orbit Homebuy. I'm also registered on the local housing register. I'm not happy with what Housing Associations define as a 'final market price'

A 2 bedroomed house on an average estate has recently appeared for sale - 50%. The final value of it is £121,500, which I still think is too high. If it was capped say at £80k then it might be feasble. Their estimated costs of it £577 a month (£77/month over the rent I'm currently paying). That's with a 35 year mortgage @ 5.99%. I have no intention whatsoever of taking a mortgage out for that long so estimated costs will probably be over £625 a month.

Shared Ownership still doesn't seem like an affordable option to me.:unsure:

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Final verdict was that I got told I needed to stretch myself more and that I could afford something easily.

Oh well... I don't think I'm going to harbour a grudge against them, they probably saved me from doing something very silly.

All the best, MattW!

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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