Someone explain shared ownership (Scotland)

(5 Posts)
DSM Thu 03-Oct-13 20:48:12

I'm looking at a shared ownership property, and I am so confused about how it all works!

All I know so far is I have to earn over £20k but under £36k. I have to not own a home. So far so good!

But how does it work? Do I just get a mortgage for the value of the % for sale? And then how do I buy the rest, eventually? Save up actual cash? Take a bigger/second/re mortgage?

Also any help with HOW to get a mortgage would Venice - do I just go to the bank and ask?! Do I make an appointment?

Oh god so lost. I've always rented!

Crutchlow35 Fri 04-Oct-13 13:17:04

The idea is that you own a percentage of the house so say 50% and the builder retains the other 50%. You then pay your mortgage and a small rent to the builder. it can either stay that way or, if you get a windfall or a good salary increase and can borrow more money then you can increase your mortgage and increase the percentage you own on the property.

I wouldn't go direct to a bank. Go direct to a good independent mortgage advisor as they will have the best deals available to you.

If you are Lothian, Borders, Fife I can recommend someone to you.

DSM Sat 05-Oct-13 19:59:13

Thanks, yeah I am in Lothian.

I'm unlikely to get a windfall (fingers crossed though!) and my salary isn't going to double anytime soon. So how would I ever buy up more percentages of the property?

IrisWildthyme Sat 05-Oct-13 20:03:57

You would pay a mortgage on 50% and rent on the other 50%, and after 25 years you would own 50% outright and have no more mortgage to pay but would still need to pay the 50% rent. At that point (or perhaps sooner if you get a pay rise/promotion in the next 25 years) you might be able to take out a mortgages for another 25% and own a bit more.

The advantage is that once you retire, and have a smaller income, you won't have to pay the same level of rent as you would if you spent the whole time from now till retirement age renting.

Ragusa Sat 05-Oct-13 20:13:34

Be very careful about the rent level. It should be at or below 3% of the value of the unsold equity per annum, and rent rises shoild be clearly stipulated in the lease. .

It can be harder to get a mortgage on shared ownership, so check this out with a whole-of-market broker first.

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