Shared equity

kiwi · 05-07-2008, 04:49 AM

Has anyone looked into this as an option for buying a house? What do you think are the pros and cons?

Sam&Si · 05-07-2008, 09:58 AM

Hi Kiwi,

I've dealt with alot of shared equity and shared ownership in the UK, didn't realise it was in Oz/NZ as well. If it's anything like the UK version in that the % contribution by the housing association/housing agency is merely secured on the property as a Second Charge (your conventional mortgage will be the first charge) and that when you want to repay you will repay the relevant % of the property value at the time of repayment then it's fine. You are basically just buying the house outright, but with the benefit of a 2nd charge. You will be the sole registered owner on the title deeds. The Charge provider will share in the rise and fall of the property value with you. This means that when you want to repay the Charge you will repay more or less according to whatever the market value of the house is at the time you want to repay.The only thing to watch out for is whether there is an obligation to repay after a set time (some over here set a repayment date of 10 years) - with the UK version of the Charge you can't pay it back in instalments or monthly, only in a lump sum, so it would be impossible to pay it back after 10 years without remortgaging/selling the house/winning the Lottery. The other thing is that having a 2nd charge will reduce your chances of taking out additional secured loans/further borrowing against the property in the future, but that's not necessarily a bad thing and I find it's actually beneficial for people as it means they have to stay living within their means.

Hope this answers your question, but let me know if it doesn't make sense

x

kiwi · 06-07-2008, 01:46 AM

Thanks. We just noticed it advertised on a real estate site. I think it was an Aussie government scheme, but didn't notice anything about a set time to repay the lump sum and wondered what sort of catches there might be. That would be a killer. Thought it might be an option for freeing up a bit of money, but I shall go and have a closer look.

kiwi · 06-07-2008, 06:52 AM

Well after a bit more research I don't think we'd qualify.
In WA you have to be low income to qualify, although I'm not sure what that means, Hopefully, that won't be us, though it might be if one of us can't get a job. You get 25 years to pay, and you can purchase back 5% lots from the govt. if you have spare cash. But the govt. owns 20% and they get 40% of the profit if the house goes up in value and you pay 20% if it goes down. In Queensland, you have to be in a council house by the sounds of it to qualify, so I guess that won't be an option after all.

Sam&Si · 06-07-2008, 04:34 PM

Sounds a bit dodgy mate, I'd definitely give it a miss.

x

mandy1 · 07-07-2008, 02:14 AM

Hi all
From what I have looked at you have to have an income below £80000 per annum (if you have children less I think if you are single). You the co-own the property 60% yours and %40 the govt. You have the option to buy back the 40% in lots of 5% per year as , when & if you wish to. Basically you are buying a house for the same kind of amount that you'd rent for. You are able to live in it for as long as you like or sell as and when. The govt get back the 40% if you sell.
Mandy x