Shared ownership mortgage
Posted: September 25th, 2017, 4:41 pm
Hi,
Can anyone tell me if this is a sensible purchase.
We are looking at buying a 40% share of a house the vendor has made improvements to the house to include a conservatory and an extension to the ground floor and this is what is confusing things, this is the information I have received from the housing authority that has the 60% share.
"The purchase price has been calculated as follows:
Current Full Market Value: £250,000 (in current condition including improvements)
Market Value Disregarding Improvements: £220,000
£30,000 difference in value made by improvements.
40% of £220,000 = £88,000
Plus £30,000 difference in value made by improvements = £118,000 (purchase price for 40% share)
However a lender will value the 40% share as 40% of the current property value (£250,000) which would be £100,000, therefore you would need to fund the additional £18,000 via cash."
We hope to staircase in the future to buy more shares but I am worried that we may not get our deposit amount of £18,000.00 back. I only have this money due to a redundancy or we would not even be able to think about buying a share of a house. We also will only have 16 years to run on a mortgage hence why we are looking at a low value purchase.
Any advice on this would be really appreciated as I am finding it really hard to understand. The alternative is that we keep the money in the bank and carry on renting our present house and hopefully we would be able to save some more, but each year that goes by will reduce our overall mortgage term.
Help!!
totally confused and overwhelmed
Lizzy
Can anyone tell me if this is a sensible purchase.
We are looking at buying a 40% share of a house the vendor has made improvements to the house to include a conservatory and an extension to the ground floor and this is what is confusing things, this is the information I have received from the housing authority that has the 60% share.
"The purchase price has been calculated as follows:
Current Full Market Value: £250,000 (in current condition including improvements)
Market Value Disregarding Improvements: £220,000
£30,000 difference in value made by improvements.
40% of £220,000 = £88,000
Plus £30,000 difference in value made by improvements = £118,000 (purchase price for 40% share)
However a lender will value the 40% share as 40% of the current property value (£250,000) which would be £100,000, therefore you would need to fund the additional £18,000 via cash."
We hope to staircase in the future to buy more shares but I am worried that we may not get our deposit amount of £18,000.00 back. I only have this money due to a redundancy or we would not even be able to think about buying a share of a house. We also will only have 16 years to run on a mortgage hence why we are looking at a low value purchase.
Any advice on this would be really appreciated as I am finding it really hard to understand. The alternative is that we keep the money in the bank and carry on renting our present house and hopefully we would be able to save some more, but each year that goes by will reduce our overall mortgage term.
Help!!
totally confused and overwhelmed
Lizzy