OPTIVO S GUIDE TO SHARED OWNERSHIP

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1 OPTIVO S GUIDE TO SHARED OWNERSHIP

2 Are you interested in Shared Ownership, but don t know much about it? Our handy guide is here to help. If you re struggling to buy your own home, Shared Ownership could turn your dream into a reality. Optivo has a fantastic selection of properties, from beautiful apartments to modern houses, situated throughout London, the South East and the Midlands. From brand new to previously owned, a great home could be within your reach through Shared Ownership. Visit to see what s currently available to buy. 2

3 What is Shared Ownership? Shared Ownership is a form of affordable housing that combines renting with buying. It is for people who want to have a stake in the ownership of their home but who are unable to buy outright at present. If you buy through Optivo you share the ownership with us. You buy the biggest share you can afford with a deposit and a mortgage and then pay rent to Optivo for the share that you don t own. This combination is usually cheaper than renting outright and means you build up equity in the property as you pay down your mortgage. You will also know that as long as you pay your mortgage, rent and other expenses, nobody will ask you to leave your home. In most cases you can buy further shares of the property until you own the whole property. Who is eligible for Shared Ownership? Shared Ownership is intended for people who can t afford to buy a suitable home on the open market. Some local authorities may also stipulate that purchasers must currently live in, near or have a connection with the borough the property is situated in. Ask us for more details - we re happy to help answer any questions. Shared Ownership basic criteria: You must be at least 18 years old Outside of London your annual household income must be less than 80,000 Within London your annual household income must be less than 90,000 You should generally be a first time buyer (you don t already own a home). If you do already own, you must be in the process of selling You must show you are not in mortgage or rent arrears You must be able to demonstrate that you ve a good credit history (no bad debts or County Court Judgements) and can afford the regular payments and costs involved in buying a home You must have a deposit. At the moment it is not possible to borrow 100% of the money you need to buy your share. Therefore you need a cash deposit. Generally this would be 10% of the value of the share you wish to purchase. In some circumstances a 5% deposit might be possible. You can pay a larger deposit You must be able to obtain a mortgage. The amount you can borrow will depend on your income. Your deposit plus the mortgage must equal the amount of the share you wish to purchase You will also need savings to cover the costs of buying a home mortgage fees, solicitor s fees and possibly stamp duty. The actual amount you need will depend on the property you are buying but could be around (plus your deposit). 3

4 Can I buy a Shared Ownership property with someone else? Yes, up to four people can become joint owners but all joint applicants must individually and jointly meet the eligibility criteria. How does Shared Ownership work? You purchase a share of a property from either the existing shared owner or directly from us if it is a new property. You will need to arrange a mortgage to buy the share. The share purchased will depend on what is being offered and what you can afford and will range from 25% - 75%. You will be expected to buy the share you can afford. Existing shared owners will be selling the share that they own. You will pay rent for the share that you do not own. If you buy further shares your rent will reduce. 4

5 What does the Shared Ownership lease do? You will be given a lease that will set out your rights and responsibilities as a shared owner. The lease entitles you to live in the property as owner-occupier for the length of the lease. It will entitle you to buy further shares in the property and sets out how you can do this. It also outlines how you can sell your share. Other points in the lease outline your responsibility for repair and maintenance of the property and for payment of rent and service charge. What are the initial costs? You will need to give careful consideration to the cost of paying a mortgage and rent, as well as the additional costs for repairs and maintenance. You will require a deposit and additional savings to pay the costs of the purchase. You will then need to furnish your new home. Deposit often 10% of the share you buy. 5% might be possible. If your income is not high enough, you might need to pay a bigger deposit Legal Fees you will need a solicitor or conveyancer to undertake the legal work Mortgage/valuation fees you may need to pay a mortgage arrangement fee, the lender will also charge you for a survey before offering you a mortgage, they can advise you on the different types and costs of survey. Sometimes these costs can be added to the mortgage Stamp Duty Land Tax This issue has been complicated by the autumn 2017 budget and advice should be sought from a solicitor Removal costs if you are moving from another property Furnishing costs if this is your first home. What are the running costs? Mortgage repayments repayments will vary according to the lender and the current interest rates Rent the monthly rent will be based on the share you do not own. The percentage paid will be reviewed each year Council Tax you will have to pay council tax to the local authority Repairs if you have purchased a house, you will be responsible for all repairs and redecoration, both internal and external. If your home is a flat, you will be responsible for all repairs and redecoration internally. Your landlord will undertake to keep the external building in good repair and will maintain communal areas. You will have to pay a share of the costs involved. This is called a service charge Insurance Optivo will insure the structure of your home (buildings insurance) but you will need your own contents insurance Heating, lighting and water bills you are responsible for your own bills Fittings and furniture you are responsible for supplying your own fittings and furniture. 5

6 Where are Shared Ownership homes advertised? Housing Associations advertise new Shared Ownership housing schemes and pre-owned individual homes on the Government Help to Buy websites If you re interested in homes in Greater London you ll find all new and pre-owned Shared Ownership properties advertised on the Homes for Londoners webpages. If you live in the South East or the Midlands, your next step is to register with your local Help to Buy Agent, either Help to Buy East & South East or Help to Buy Midlands. Googling these terms should lead you to the correct web pages The major property portals, such as Zoopla, also advertise new shared ownership schemes and previously owned Shared Ownership properties. What happens if I find a home I would like to view? Generally, if you want to view a property through Optivo, you will be asked to speak to a financial advisor. They will assess your income, expenditure and savings to make sure you qualify for the scheme you are interested in. During the assessment the amount of mortgage you could borrow will become clear. This will then determine the percentage share you could buy. The advisor will make sure the monthly mortgage payments and the rent/other costs you pay are affordable to you Once the advisor has agreed that you are eligible you would arrange to view properties through either the New Homes sales team or the Resales team (for pre-owned homes). What happens if I decide I want to buy a Shared Ownership home? If the home you wish to buy is available and you satisfy all the conditions and criteria mentioned above you would need to pay a reservation fee so that we can allocate you the home. This figure is deducted from the purchase share price. If you decided not to proceed with the purchase we would retain this fee towards administrative costs We monitor the purchase process and will expect certain purchasing milestones to be reached in good time otherwise the property may be reallocated. The milestones would include: Instructing a solicitor, applying for a mortgage, obtaining a mortgage offer, paying for legal searches In certain circumstances more than one party may wish to buy the same property. In such circumstances Optivo would have the final decision on who is allocated the property. 6

7 Additional information for purchasers Can I make improvements or alterations to my home? You must ask us for written consent to the improvement or structural alteration that you want to make. What happens if I fall behind with my mortgage repayments? If you begin to have financial problems which means you cannot pay your mortgage, you must let your mortgage lender know as soon as possible. If you cannot agree on a solution with your mortgage lender there is a risk that they will take possession of your property and will sell it to recover the money owing to them. What happens if I fall behind on my rent or service charges? Under the terms of your lease you are legally obliged to pay the rent and service charge. As soon as you realise that you have a financial problem contact us to see how we can help. What do I do if I want to sell? You may sell your share at any time but you must tell us that you want to move. Your lease may have clauses that allow us to nominate a prospective purchaser and you may be required to have your property valued to determine the sale price of your share. You will benefit from any increase in the value of the shares that you own but you must be aware that you will also be affected if the value of your share falls. Disclaimer The information contained in this guide does not constitute an offer or contract. Details provided are for guidance only and may be subject to change. Any intending Sharing Owner must satisfy him/herself as to the correctness of any statement in the particulars. 7

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