Archive for the ‘Mortgage’ tag
Shared Ownership
Shared Ownership homes offer an affordable way of getting on the property ladder.
The scheme is normally run through a Housing Association, who will own the freehold and you will then purchase a share i.e. 25%, 50% and 75% and pay a rent on the remaining share to the Housing Association. By doing this you have the same rights as a full home owner but at a more affordable cost.
The process would be:
• Contact the Housing Association involved with the property.
• They will check that you meet the criteria for their scheme
• They normally have financial advisors they can recommend so that you can arrange your mortgage for the percentage you wish to purchase
• They normally require a 10% deposit to proceed.
• The Housing Association will instruct their Solicitors and then they will send a Lease to the Solicitors of your choice and the works will proceed.
• You will need to have searches carried out on the property i.e. local search, drainage, environmental and chancel search.
• Throughout the process ensure you raise any queries you may have so that they can be resolved prior to completing.
Every owner will enter into a Lease with the Housing Association which will have certain restrictions and responsibilities that you have to abide by. The Lease will also inform you of how much rent and service charge you have to pay to the Housing Association and what that payment will cover e.g. cleaning of communal areas etc.
We also work with a Housing Association who deals with people that have learning disabilities or mental health problems to be able to live in their own homes on a shared ownership basis and their benefits assist them with this.
You also have an opportunity of purchasing more shares in your property; this process is called “staircasing”. By doing this it will obviously reduce the rent payable. You will still have to abide by the regulations etc set out in the Lease you originally signed.
If you have any further queries please do not hesitate to contact Lynsey Hart on 01235 771234 or by email lynsey.hart@clmlaw.co.uk.
Equity Release Schemes
- They can give a lump sum, or a regular income or both
- If the property is your principal residence, the money released is free of tax, although if the cash is then invested there maybe tax to pay on any income or growth
- No regular repayments (This does not apply to Home Income Plans)
- You do not have to down size or move to a less expensive area to unlock equity
- With reputable schemes, you are guaranteed to be able to live in your home until the day you die
- You may reduce your inheritance tax bills
- The lump sum can be used to pay for care bills without having to sell up
As with all these schemes, there are also disadvantages:
- If you die soon after taking out the equity release plan, you could effectively have “sold” your home, or a share of it, cheap.
- Interest can roll up quickly on the amount loaned so you may not be able to leave something from the sale proceeds to your family even though the lump sum you were lent only seemed a fairly small proportion of the home’s value
- If the scheme provides an annuity, annuity interest rates are very low but get higher the older you are
- In some cases, state benefits may be lost and you may have to pay extra tax
