Shared ownership and shared equity mortgages are becoming increasingly popular in the current climate, with frustrated renters looking for alternative ways to get on the property ladder. Lending criteria has been heavily tightened since the financial crisis of 2007/2008, with banks looking to reduce their exposure to risk. The end result is that prospective buyers have to meet stricter conditions and find ever-larger down payments in order to get the equity they need for their first property.
As turning more working people into homeowners is a good indicator of overall prosperity in the country, governments in both the US and the UK are keen to get the housing market moving again. Shared ownership and shared equity mortgages are now seen as a viable option for those who cannot secure full home loans in the traditional fashion. But what are they, and how do they benefit prospective buyers?
With shared ownership mortgages, the buyer purchases a stake in the property – it can be anything from 25 per cent to 95 per cent – with a housing association, either private or state-backed, taking the remaining stake. As the third party puts in a secure equity stake, the mortgage lender incurs reduced risk and is free to offer lower rates and ask for a smaller down payment from the buyer.
With shared equity, the buyer takes on complete ownership of the property, but the mortgage does not cover the full value. An equity loan from a private or state-backed third party makes up the difference.
Strengths and weaknesses
Shared equity mortgages typically carry better rates than shared ownership mortgages, and the down payments are usually lower. This is because the lender will apply the loan-to-value ratio to the whole property market value, and the buyer may have to pay as little as five percent as a deposit. With shared ownership, the loan-to-value ratio is applied only to the proportion of the property the borrower owns.
However, shared equity loans cannot account for a substantial proportion of the property value – the individual will have to secure credit for at least 70 per cent of the market price. Shared ownership products allow for much smaller financial commitments.
For prospective buyers considering these plans, the choice seems to be weighted on individual financial circumstances. Those who can almost but not quite afford a traditional mortgage loan may want to look at shared equity, while those who are a long way off may prefer a shared ownership option. The differences between shared ownership and shared equity mortgages can be very complex, however, so it is important to seek professional advice should you think either path is a realistic proposition for you.
For the past few weeks, the toilet in the master bathroom has been running slightly. It was easy to get it to stop by jiggling the handle, so I put it off. Well last weekend while my wife was out of town, it got progressively worse to the point where I had to turn off the water or it would have kept me awake all night long, not to mention wasted a ton of water. It was a busy weekend so I couldn’t really do anything about it.
So Friday, I finally had the time and opportunity to get something done. It seemed that the toilet ballcock mechanism was the culprit, so I went to Lowe’s and picked up a new one for $9. Well, I got it in and hooked up the water supply line which didn’t want to seat quite right and ended up spraying water all over the place. I tried to make some adjustments and in the process broke the flush valve.
I spent some time watching a You Tube video and got a better sense of how the insides of the toilet tank worked before going to Lowe’s a second time and picking up a new water supply line, flush valve assembly, and a good adjustable wrench. I was trying to get this project done in between appointments so while at lunch with the youngest 2 kids, thought I should probably go to Lowe’s a third time and pick up some plumber’s tape. The second and third trips were actually on the way to various appointments so it really didn’t involve any extra gas.
Finally, after replacing all the hardware associated with a toilet tank, making 3 trips to Lowe’s and spending $36, I managed to stop the leak. Once I had everything together, it only took me about 20 minutes to replace all the pieces and put it back together. But figuring it all out and deciding what I needed to do did take a little bit of time. Nevertheless, it is a satisfying feeling knowing that it would have cost a minimum of $75 just to have a plumber come and look at the leak.
Have you ever saved money on DIY projects? How much have you saved? Or does it end in disaster and cost more than hiring a professional in the first place?
Here are some Carnival links that I need to share: