Home Ownership for Lower Incomes

Perhaps one reason more people do not take advantage of the economically sensible shared ownership scheme is that the programme is surrounded by many myths. Builders, lenders, and government officials should work to dispel these inaccuracies while encouraging interested buyers to let mortgage comparisons help them discover if it is a feasible option.

 Myth 1: Shared ownership is not home ownership.
The truth: It is a path to 100 per cent ownership. Using stairstepping, owners can purchase additional shares in their home. In fact, according to the National Housing Federation, 25 per cent of all participants eventually own 100 per cent of their homes. Some associations report 40 to 50 per cent of all buyers reach 100 per cent.

 Myth 2: People in shared ownership homes must stairstep to full ownership.
The truth: Some people prefer the partial arrangement. It is financially friendly and less risky than a full mortgage. In addition, they enjoy the property management features that accompany the lease shares of the property. However, staircasing reduces rent. Therefore, many in these homes do participate in stairstepping.

Myth 3: Shared ownership is a trap.
The truth: Any property investment has risks. When markets turn down, selling becomes difficult. When markets turn up, they become lucrative sellers' markets. This is no different than conventional mortgages. Even freehold owners may feel trapped during a poor market. Waiting for the market to turn around is the key.

Myth 4: Selling is difficult.
The truth: According to the Homes and Communities agency, shared ownership homes are selling well and consistently. An added benefit is that those who sell them avoid high estate agent fees. In addition, a study published by Cambridge University concluded that the issues that confound these sellers are the very same issues that concern traditional home sellers. For example, both types of sellers face difficulties in down markets. These difficulties include poor demand, market uncertainty, and negative equity. The bottom line is that shared ownership is still ownership. Unlike renting, ownership involves some risk.

 Myth 5: The scheme is for key workers only.
The truth: The government actively promoted some of its low-cost options to key workers as a means of gaining home ownership and accumulating wealth. But this promotion was simply targeted advertising. It has never been available only to key workers and is available to all families with incomes lower than £60,000 per year. To find out if you qualify, contact your local Help to Buy agent.

 Myth 6: Property management is substandard.
The truth: Property management frequently exceeds the quality of property management of conventional rental properties. Property management is a delicate balance of fees. Small fees may please residents but result in poor response time and inadequate service. Larger fees may help provide services, but from a financial perspective, they may be unwelcome to tenants.

Myth 7:  Properties are low quality.
The truth: Today's schemes offer homes that exceed the standards of many conventional builders. Buyers can expect more space and many extras that are considered upgrades outside the shared ownership markets. To qualify for a grant from the Homes and Communities agency, shared ownership developers must build to a very high standard.

This is a scheme that is designed to help middle class citizens become homeowners. Even young professionals find it difficult to collect a 25 per cent down payment on a conventional home purchase, leaving this as an excellent way to begin building equity. In addition, most shared ownership developments are located conveniently close to centres of commerce, eliminating the long and difficult commute associated with renting a comparable flat.

 Instead of focusing on the myths , interested parties should consider the realities. For example, the market does not have nearly enough properties available. In the United Kingdom, there are approximately 26 million homes. Of these, only 200,000 are shared ownership homes. Since rents are rising and people are increasingly dissatisfied with long commutes, the government should work to increase the number of opportunities.

To find the right home and the right mortgage, many people turn to mortgage comparisons. With diligence and patience, many find shared ownership to be a manageable means of purchasing. Therefore, disregard the myths  and do a little research. This may be just the opportunity that you need to build equity for the future.

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