What is ‘Shared Equity’?
‘Shared equity’ means
you can purchase a property with the financial assistance of a
housing association via an ‘equity loan’. You only pay a
percentage of the full open market value of the property but you
will own it outright. The housing association will retain the
remaining percentage as a Legal Charge (second mortgage) on the
property. Eg. If you pay £70,000 for a property worth £100,000,
your equity share will be 70%. The housing association’s share
will be 30%.
Unlike a mortgage, there
are no repayments due to the housing association on its equity
share. It can be repaid either voluntarily or on a future
is a Charge?
A Legal Charge (or Legal
Mortgage) serves to act as the legal document that registers all
mortgage lenders interest over a property. All Charges
pertaining to a property are recorded on the ‘Charge
Certificate’ which is managed by HM Land Registry.
On all our schemes, your
mortgage provider will have the first registered Charge and
United Welsh will have the second registered Charge. In the
case of repossession or upon future sale of a property, the
original mortgage provider will be paid first from the proceeds
of the sale and then United Welsh.
is an ‘in-principle’ mortgage offer?
Mortgages can be agreed
in principle so you know that you can get the mortgage before
you make offers for a property. Your Agreement In Principle
will be the first document provided to you by your mortgage
lender. It shows any prospective seller that you can actually
get a mortgage to cover the purchase price. This can include
the lender checking your income, expenditure, credit rating and
confirmation of the amount you are able to borrow.
You will need this
document before you start property hunting!
can I find information on mortgages?
The Financial Services
Authority provides information on mortgages – you may like to
visit their website (www.moneymadeclear.fsa.gov.uk)
need a deposit?
When your application
has been approved, you are able to select a property you wish to
purchase. You are required to pay the housing association
a £250 deposit to reserve the property. This will be
deducted from the purchase price upon completion. Is is
non refundable if a successful completion is not achieved.
Some mortgage lenders
also require you to pay a deposit based on a percentage of the
amount you wish to borrow. Your financial advisor or mortgage
provider will be able to provide this information.
purchase the housing association’s equity share?
Yes, you may purchase
the housing association’s equity share outright but not normally
within the first three years. You may also increase your equity
share by purchasing portions of equity, but not less than 10% at
any one time (otherwise known as ‘staircasing’)
sub-let my property?
No, purchasers must
occupy their property as their only or principal home.
do I do when I want to sell my property?
You need to notify the
housing association in writing that you wish to sell your
property. You are required to provide a property valuation and
agree the purchase price with the housing association. The
housing association will try and nominate a purchaser to you
from its waiting lists. If a purchaser is not identified within
the nomination period, you are at liberty it sell the property
on the open market via an estate agent, repaying the housing
association its percentage equity share upon completion of the
does the ‘Service Charge’ cover?
The service charge
contributes towards the costs of grounds maintenance, cleaning
and maintenance to communal areas (eg hallways, staircases),
buildings insurance, ground rent, and servicing of lifts and any
specialist equipment, if provided, eg video door entry systems,
if I already own my own property?
Our schemes are aimed at
first time buyers who cannot afford to purchase a property
outright. Someone who has never owned a property and never had
their name on a mortgage or title deeds. However, consideration
may be given, on a case-by-case basis, to former homeowners ‘in
their own right’ eg those who have sold their jointly owned
property as a result of divorce or separation.