Shared Equity
Shared Equity Explained
- You own your home but only have to pay 75% of the home's value
on date of purchase
- You can expect your monthly outgoings to be circa 25% less
vis-à-vis mortgage re-payments, for example, a monthly mortgage
re-payment of £1200 could fall to as little as £900 per month if
the shared equity model is utilized.
- It allows access to a potentially better quality of home than
you might otherwise be able to afford at this particular time, but
you have time to save and work towards paying for the home in full
(i.e. 10 years).
- There is very little possibility of a mortgage deposit being
required as a result of most lenders' willingness to provide 100%
lending on the 75% of the purchase price. This means that you can
avoid the payment of a sizeable deposit; typically a prerequisite
to a new home purchase.
Scenario 1
The purchaser wishes to buy an apartment
which has a price of £200,000 using our SHARED EQUITY MODEL. The
purchaser would pay to Westpoint £150,000 (which is 75% of the
price) and would own the property with Westpoint taking a second
charge on the outstanding balance (i.e., 25%).
5 years later the purchaser decides to sell the property.
Westpoint and the purchaser appoint a surveyor to work out the
open market value and we are advised that it is £230,000.
The purchaser would pay to Westpoint 25% of £230,000 =
£57,500
In essence, what has happened is that Westpoint have had their
original £50,000 stake paid back to them and a further £7,500 as a
result of the property's value rising by £30,000 over the 5 year
period, hence the overall payment of £57,500.
Scenario 2
The purchaser wishes to sell the
property in 5 years time. Westpoint and the purchaser appoint a
surveyor to work out the open market value and we are advised that
it is £200,000. (The same price as the original price on day
1)
The purchaser would pay to Westpoint 25% of £200,000 = £50,000