Being able to get your foot on the first rung of the property ladder is becoming more difficult for First Time Buyers. With salaries stagnating and property prices only ever seeming to increase it can seem out of reach for some. Most banks now require a minimum of 5-10% deposit of the purchase price, which can make home ownership feel like an impossible dream. The good news is…. There is another way! Co ownership!
I bought my first property in 2002 with the help of Northern Ireland Co Ownership. At the time I could not afford to buy a property that I would have been happy to live in. I tried to find a property within my budget but it was impossible.
After a few months of house hunting I went to see a mortgage advisor who suggested that I consider Co ownership. They explained that I would take a mortgage to finance my share and pay Co Ownership a rental payment for their share. This worked out much cheaper than a traditional mortgage. Not only could I increase my purchase price but I didn’t need a deposit either! I was delighted. Very quickly I found a property (Through Lindsay Fyfe of course!), made an offer and started the application process. The process is pretty similar all these years later.
Basically with Co Ownership you can buy any property you like. As long as the property passes on survey and is within your affordability. The maximum cap on house values with Co ownership is currently £160,000.
Before you start to look at properties you should check that you meet the Criteria with both the bank and Co Ownership. You can do this with a mortgage advisor or online at https://www.co-ownership.org/help-tools/starter-share-calculator/
When you apply to Co Ownership it is important to make sure your application is fully completed and all supporting documentation is sent in along with your application. This will speed up your application. Once the application is processed they will contact you and collect your £400 application fee. This fee covers your property survey fee and also part of your solicitors’ bill. Your solicitor will need to be on the Co Ownership panel.
Co Ownership will invite you to attend and interview at their Belfast offices. This is nothing to worry about as it is basically an informal interview to make sure you understand how the scheme works. Once the property has been surveyed and you have been through your interview Co Ownership will issue you with an acceptance letter. It is at this stage you can finalise your mortgage finance.
The Key thing to remember with Co Ownership is that you own a percentage share of the property. You can purchase between 50-90% share depending on affordability. It would be wise to buy as much as you can afford from the outset as you will have less to pay back in the future. You will usually find that the banks offer quite low rates on Co ownership mortgage because they are calculating the rate they charge on risk. On a 50% share the bank will hold the first charge therefore in the eyes of the bank it is low risk lending. This can make your payments much more manageable.
For Example. 6 Danescourt, Newtownards £96500. http://www.lindsayfyfe.co.uk/6-danescourt-newtownards/440661
If you buy through Co Ownership on a 50/50 share. You could take mortgage finance of £48250 over 30 years making your monthly payments around £190.14 plus a monthly rental of £100.52. Making your total Payment £290.66. Much more affordable than renting a similar property which would fetch around £500 per month rent.
Once you have bought your property through Co Ownership you will never be under any pressure to buy back their share. However bearing in mind if property values increase so too will Co Ownerships value as they own a percentage of your property value. It would be prudent to buy back the Co-Ownership share as quickly as possible. As soon as there is any change in your circumstances you should review your co ownership share. I bought Co Ownership out after 3 years of ownership as my job changed and my salary increased. I had to pay more back than I originally borrowed as the property value had increased. However I am lucky I bought Co Ownership out when I did as not long after we experienced the property boom. If I had waited I probably would never have been able to afford to buy them out.
The good news is that now the Criteria is more flexible and the application process is much sleeker. Northern Ireland Co Ownership is funded by the Department of Communities and they want to help you own your own home!
If you should require further information on Co Ownership you can check out the NI Co Ownership web site https://www.co-ownership.org/