Key Post How "shared ownership" works

Skier

That is a great example and looks roughly about right to me.

Do you not get annual statements showing how much you owe? If anyone has one, would you mind emailing it to me at brendan at this website.

now if you find any online-calculator for mortgage and put there the initial loan of 220k for 25 years and at 7.5% interest, you will see that after 6 years of repayments (from 2006 to 2011) the principlal balance (outstanding balance) is roughly 196k
Click to expand...

It's a bit more complicated than this. You might get the right answer, but you might not. The interest rate is much lower than 7.5%. The repayment rate may be 7.5%.

If someone sends me a statement, or ideally a batch of statements from the start, I will check the figures using Excel.

Given the fact that the staff do not understand how they work, I think that people need to check them. If someone sends me the statements, I will check them and then do a post about how to check them.
 
Hi Brendan;

  • I just assumed 7.5% to demonstrate that the shared ownership loan works roughly in the same way as any other commercial loan, I know it is not as simple but you have everything explained in this Thread...;
  • my point was just to show that both mortgage equity and rent equity decreases over time....decreasing overal balance .. thus the rent payment is not a waste of money as some may think (i.e. some portion of monthly "rent" repays the rental equity)
  • I have sent you my statements in August 2012 but if i remember well the data in the statement was very limited (not like from commercial bank) and no usefull in explaining how the scheme works, if you want i can send them to you again,
regards
skier
 
below you will find the most recent (Februry 2013) question asked on shared ownership during Dáil Éireann Debate..., again, it confirms that outstanding equity reduces over time also that some change in legislation may come shortly ...

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Tuesday, 12 February 2013, Dáil Éireann Debate, Vol. 792 No. 1, Written Answers Nos. 467-489

Questions Nos. 467 and 468 answered with Questions Nos. 439.

Deputy Martin Heydon asked the Minister for the Environment, Community and Local Government if he will provide an update on the review of the shared ownership scheme operated by local authorities, in particular the annual increases of 4.5% on the rental portion, which is causing financial stress to owners who are trying to manage repayments; and if he will make a statement on the matter.


Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O'Sullivan): Under the Shared Ownership scheme the rent charged on the local authority’s equity in a shared ownership transaction is to cover the funding costs to the Housing Finance Agency which are based on borrowings at the prevailing interest rates. Any difference between the rent and prevailing interest rate is reflected in the capital outstanding on the property, i.e. if the rent charged in any period is greater than the prevailing mortgage interest due on the local authority’s share the purchase price of the outstanding equity will be reduced accordingly.

The review of Part V of the Planning and Development Acts announced in the context of the standing down of affordable housing schemes as part of the Government’s housing policy statement will include an examination of the operational aspects of the shared ownership scheme. That review is currently advanced an d I expect the consultants’ rep ort that informs the review will be published shortly. Any future changes to legislation governing affordable housing schemes, including the shared ownership scheme, will be made in the context of this review.
Question No. 470 answered with Question No. 441.

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Folks

Shared Ownership is a very complex topic, which is why I started the post, to try to understand it and explain it.

Please stay exactly on topic - explanations of the current system.

Start a new thread for other discussions e.g. LPT ; the review of the system, etc

I have deleted off topic posts.

Brendan
 
Shared ownership

I recently found a post by Brendan Burgess on this topic (31/7/12). May I add the following to relating to some statements therein:
1) Rent on councils share starts at 4.3% and increases by 4.5% each year on 1st July.
2) A means tested "rental subsidy" can be claimed max.€2550 (this was in 2004). If the "rental" was really a mortgage would this be possible?
3) Mort.Pro. is paid only on the mortgage portion, not on the councils "rental"
portion.
4) Monies paid as rental does not count towards buying out the councils share.
This must be done separately. The money paid as rent is purely that.
5) The current of 2.75% applies only to the borrowers mortgage.

The above is based on documents relating to a S.O. with DLRCC in 2004.
 
Hello Brendan
Thank you for your information on Shared Ownership...it's the very best I've seen and I now have a better understanding of How It Works.
Thank you
 
Hi
Great thread.
I purchased my house in 2005, I got 90% mortgage and 10% rental.
I received a letter today saying
Capital €91,414.75

Current instalment €194.26
Estimated trs -€145.16
Mpi €35.83

Total instalment €84.93
Current interest rate 2.550%

I am assuming this is the interest only payment, would you agree?
 
€91,414.75@2.55% = €2331 per annum = €194.26 - so that looks like interest only.

If you are paying only €2331 in interest, the TRS should be very small. It should not be most of the instalment. You should get this fixed now, so that you don't end up with a nasty bill.

It's very odd that you are on interest only.
Have you rescheduled your loan?

Brendan
 
Hi, great information on this thread.

I have a friend who is in a SO Scheme but the house is totally deficient in terms of its construction (collapsed drains, "seriously unstable" chimney, gas leaks, noise problems etc.), all of which has been independently verified. The split with the CoCo is 60/40 mortgage/rent.

They are totally fed up with the house and do not want to continue living in it. They want to transfer their loan and tenancy to another council property. As they are paying "rent" to the CoCo, does this make them de facto tenants, putting a duty of care in the hands of the CoCo?

Does anyone have experience of doing something similar on an SO property?

Thank you.
 
Did you see this in post 5 above
Brendan Burgess said:
The purchaser is fully responsible for the maintenance, insurance and upkeep of the property.
Click to expand...

As to rent, it is not rent, did you in fact read the entire thread?

As to "gas leaks" I doubt it as this one utility that gets attention, if they are in doubt they will just turn off the meter.
 
See update below
Am struggling with a SO repayment calculation here:
Loan 30 years from 01/04/2007.
Loan Balance at 01/01/2016: €118,104
interest rate is 2.55%
12 payments a year, at end of month
As set out below I make the net payment after First time buyers Mortgage Interest subsidy [MIS} to be €524.52... the LA makes it €554.57

MPI is extra, as is the rented equity

There is arrears as well but if they get added in the payment goes to 735 gross/month

2016 2016
Gross Interest
Jan 598.58 250.97
Feb 598.58 250.23
Mar 598.58 249.49
Apr 598.58 248.74
May 598.58 248.00
Jun 598.58 247.25
Jul 598.58 246.50
Aug 598.58 245.75
Sep 598.58 245.00
Oct 598.58 244.24
Nov 598.58 243.49
Dec 598.58 242.73
Gross Annual 7,182.92 2,962.38
MIS (888.72) max
Net 6,294.21
Monthly 524.52

Thanks as always
Update:
Have just done math on the rented equity (RE) portion which is €18,611 and the interest rate is 6.39% ,making a payment of €131.32 against an LA payment of 101.18.
So if I add my net monthly calculated amount for the RE and my monthly loan calculation together I get €655.84 (131.32 plus 524.52)
If I add the LA calculated amounts I get €655.75 (101.18 plus 554.57)

Maybe just a coincidence.
 
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Anyone currently in the marp process withhin the so scheme? The council have been very fair with me but I am in serious arrears and currently paying what's been asked, I stupidly defaulted on loan for a long time, but when I asked what happens at end of 5 year marp process they didn't know. They are waiting on legislation as far as I know but I do have to mention the council have been very fair if I had mortgage with bank I would now be homeless
 
Hi Brendan
My wife currently has a shared ownership property with Dublin CC and has 12 years left to pay on her mortgage from the original 25. will she own the property in full (100%) after the mortgage is paid off?
 
IanRich said:
Hi Brendan
My wife currently has a shared ownership property with Dublin CC and has 12 years left to pay on her mortgage from the original 25. will she own the property in full (100%) after the mortgage is paid off?
Click to expand...

Hi Ian,
My understanding from DCC as per a conversation with them last week as Im in a similar position is that after 25 years you own half and they will also own half.

They have offered me a full 100% mortgage with them with a number of options. I can increase the monthly payment to 1400 pm and have it paid in 2027 or reduce to 650 pm and enter a 30 year mortgage with them and finish when Im 70!!

Im meeting them soon in DCC to discuss these options

I wonder is there something else going on here?

Brendan, what are your thoughts ?
Thanks
 
DCC is not correct.

From the start, you owned 100% of the house.

You also had a loan from DCC.
The balance on that loan after 25 years will depend on the interest rate charged and the payments you have made.
You can pay off this loan or increase your repayments at any time.

Brendan
 
Hi Brendan,
I am in the process of selling my shared ownership apartment, my solicitor is telling me that I owe stamp duty on the Equity that the Council holds, is this correct?
Also I am being charged land registry fees of €600!
I have no faith in my solicitor (I've only been dealing with a trainee) so any advice you can give me would be appreciated.
Thanks.
 
Skier said:
another interesting article about the change in shared ownership...

http://www.irishexaminer.com/irelan...for-shared-ownership-participants-405785.html
Click to expand...

Thanks Skier

This turns Brendan's "misnomer" concept upside down. This scheme was a scam, PERIOD.

Also something that wasn't raised by them....How dare a creditor deny a person from letting out their own home and duping the clients into paying 2,500k "legal fees" only to be further mislead by solicitors who were representing the councils. Those "fees" were also added to the life of the mortgage! Whats 2,500 over 25 years???

I partially agree that it was a government scheme to "assist" and NOT turn people into property investors.


However, ....
1-
They protected themselves against any such gain by means of the Clawback clause (denying a risk taker generating an capital in capitalist society).

3-
Not a coincidence by NO MEANS, they took into account POSITIVE EQUITY and not NEGATIVE EQUITY.

2-
Also, as not to allow anyone make a "profit" they said NOTHING about denying a "home owner" the right to sublet their "own home".
The contract states "not without the councils permission" further leading people to believe in the ambivalence of these quangos as Id been BEGGING for SEVEN YEARS to lease out my own home and they perpetually denied it. DESPITE THE CRASH.

Now I'm paying the interest on the arrears on the interest on the loan on a property that is in negative equity that I was FORCED to live in. They DENIED me EVERY TIME, FOR NO REASON.

I wouldn't hold my breath. This scam destroyed our lives.
 

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Hi all ,new to this so apologies if i make any mistakes.Any way i,m looking for advice on so.I have been made redundant and looking to reduce my monthly payments and im thinking of paying off my rent portion of loan which is 15,000 which bring my monthly payments from 749.00 to 643.00. How ever i could also go down the road of marps which means only paying interest and mortgage protection for twelve months and then going back to original mortgage with a slight increase in month payments ,also if i buy out the rented portion the girl in the council (fingal) said i could just go in and pay if off but some people hire solicitors to do it for them so they can get the title shared ownership removed,she seems to think there is no difference in either way and hiring a solicitor is a waste. Any way to sum up iv been made redundant and am looking at the best way to reduce my mortgage repayments and am hoping somebody may have some advice,thanks and again apologises if iv posted in the wrong section or anything else.
 
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