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Some one I know has purchased a house for 250k.How much rent would they pay on the 50% that is not owned?And could the `owned` bit be on a IO mortgage?

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ER........how long is a piece for string ?.

The rent on the 50% bit will be above what a mortgage would cost, thats for sure. The reason people have to buy 50/50 is because their earnings dont stack up to pay 100%. But the irony is that it costs more to pay 50% Mortgage and 50% Rent

However as a rough guess if there is 250k owing on the property I would assume the following.

125K mortgage Interest Only @ 4.5% = 468 per month

Rent to pay on remaining 50% = 600pcm

Total to pay 1068pcm. Yes you can have IO on a Shared property.

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ER........how long is a piece for string ?.

The rent on the 50% bit will be above what a mortgage would cost, thats for sure. The reason people have to buy 50/50 is because their earnings dont stack up to pay 100%. But the irony is that it costs more to pay 50% Mortgage and 50% Rent

However as a rough guess if there is 250k owing on the property I would assume the following.

125K mortgage Interest Only @ 4.5% = 468 per month

Rent to pay on remaining 50% = 600pcm

Total to pay 1068pcm. Yes you can have IO on a Shared property.

The other thing I might like to add, having looked into this as a 'key worker' (at the time we were very short of staff) Not only is the market value that your friend is buying at over the odds, but, he does'nt actually have any choice at all about the mortgage company he takes it out with! In my mind the whole shared equity thing is gonna leave people a hell of a lot worse out of pocket than stumping up their own interest only mortgage, the odds are so stacked against you if even the faintest drop occurs that it's almost financial suicide!!

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Other problem and something to be carefull of.

Who would want to buy your 50% share off you if you wished to move?.

And if there is a crash, then you are well and truly married to that property.

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ER........how long is a piece for string ?.

The rent on the 50% bit will be above what a mortgage would cost, thats for sure. .... if there is 250k owing on the property I would assume the following.

125K mortgage Interest Only @ 4.5% = 468 per month

Rent to pay on remaining 50% = 600pcm

The rental yield implied by lj above is 5.76%

Lastest Arla figures suggest this is towards the high end:

Region_______________________Gross Yield (%)

Prime Central London___________5.10

Rest of London_________________5.01

Rest of South East______________5.01

South West____________________4.07

Midlands______________________5.06

North West____________________4.90

North East_____________________5.28

Scotland/Wales/NI______________6.00

All Regions_________________ 4.99

I don't kno wthe details of shared ownership deals but from the above figure it would seem likely that rent and interest would be similar. As an owner you will additionally be responsible for maintenance etc. Perhaps somebody with more knowledge would care to say whether one would be responsible for maintenance on 100% of the property, or only 50% (ie shared bills). If the latter who decides what work needs doing?

Edited by Sledgehead

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Sorry - but if this is a shared ownership/equity scheme via a housing association (as most are) then the cost of the rent for the unowned 50% will - in my experience - only be around one third of the cost of the 50% being financed via a mortgage.

This is because the housing association subsidise the rent - you do not pay market rents on the unowned 50%.

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Sorry but done me research now.

The rent payable is 3.5% of equity you dont own.

So the figures are thus.

125K Mortgage IO = 468pcm

Rent = 364pcm

So for an extra hundred a month you would be far better off buying it all. Another thing, you cannot sell it on the open market, you have to give the housing association 2months to sell it first based on their valuation.

Furthermore the houses I am currently looking at on the net are overpriced by miles in the first instance.

Take a look yourself, nobody pays those prices for 2 bed flats in Social housing blocks.

Here is some links

http://www.chg.org.uk/homes/urbis/index.html

http://www.chg.org.uk/homes/buyahome.html

Pricing and floor plans

Information correct as at 25/10/05

Click on the property plan type to view a floor plan.

Call Keystart 020 8832 3304 for up to date availability details.

Plot no.

Postal address

Type

Floor

Plan

Full value

A1

1

2 bed flat

Ground

Type E

£245,000

A2

2

2 bed flat

Ground

Type M

£250,000

A3

3

2 bed flat

First

Type E

£245,000

A4

4

2 bed flat

First

Type E

£245,000

A5

5

1 bed flat

Second

Type D

£215,000

A6

6

2 bed flat

Second

Type E

£245,000

A7

7

2 bed penthouse

Second/Third

Type I

£280,000

A8

8

2 bed penthouse

Second/Third

Type I

£280,000

A9

9

1 bed flat

Third

Type D

£215,000

A10

10

1 bed flat

Third

Type D

£215,000

C1

26

2 bed flat

Ground

Type K

£250,000

C2

27

2 bed flat

Ground

Type F

£245,000

C3

28

2 bed flat

First

Type G

£250,000

C4

29

2 bed flat

First

Type F

£245,000

C5

30

2 bed flat

Second

Type G

£250,000

C6

31

2 bed flat

Second

Type F

£245,000

C7

32

1 bed flat

Third

Type B

£210,000

C8

33

1 bed flat

Third

Type A

£210,000

Important notes

A monthly rent is payable, calculated at 3.5% of the un-purchased equity.

An annual service charge is payable, amount to be confirmed.

Properties to be sold on a 99 year shared ownership lease.

Rent and service charges are subject to an annual review.

Properties are sold with a minimum 25% share.

Please remember, your home is at risk if you do not or cannot keep up repayment on a mortgage or other loans secured on it.

© Catalyst Housing Group 2005

A charitable housing association

XHTML 1.0

Shared ownership

After I move in...

How do I buy more shares in my home?

You will need to live in your home for one year before you can buy more shares. Buying further shares is called 'staircasing'. A minimum of 10% can be purchased when you staircase. After your initial purchase, you can 'staircase' up to a maximum of three times to reach outright ownership. When you do buy further shares, your rent will be reduced accordingly. You are under no obligation to buy further shares if you prefer not to.

Can I make alterations or improvments to my home?

Before you make any alterations, you will need to obtain the written consent of Keystart Housing Association. Please ensure you write to us for permission. Keystart do not unreasonably withhold approval.

How do I sell the property in the future?

Keystart will help you to sell your property. Under the terms of the lease, Keystart have a duty to sell the property to a person nominated by the local authority. A timescale is allowed, usually two months, to obtain the nomination. If no nominations are forthcoming, you can sell your property on the open market.Further information can be obtained from our re-sales team.What happens in the event of death?

In accordance with your will or the law of Intestacy, the lease can be passed on or sold. The new shared owner will be equally bound by the lease.

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125K mortgage Interest Only @ 4.5% = 468 per month

Rent to pay on remaining 50% = 600pcm

On that basis £125K worth of property is renting out for £600/month. Near where I live there are two identical flats... one for sale at £174,950 and the other for rent at £650/month. Another development near me contains flats that were selling at £145K+ and there's a relatively nice one to rent for £475/month.

Expecting £600/month rent from £125 worth of property is, therefore, wildly optimistic based on the evidence I can see. Of course there are regional variations.

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The rent on the 50% bit will be above what a mortgage would cost, thats for sure.

Sorry but done me research now.

125K Mortgage IO = 468pcm

Rent = 364pcm

DOH!

Does he learn his lesson?

So for an extra hundred a month you would be far better off buying ....

So now you've made this strident assertion, presumably we can look forward to a drastic vault face once you've actually done your research.... :lol:

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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