Shared Ownerships Have Become A Viable Alternative

The subprime crisis had its fallout over most global economies and led to the closure and collapse of some major financial lending institutions

. They made the mistake of lending and securitising the loan that they had to lend to the subprime class of borrowers and could not recover the money back. The real estate market showed a sharp decline and the collaterals were just not enough to bail the defaulters, since there were no takers for the seized properties. Consequently banks stopped lending money and the liquidity situation in the market became so acute that nobody was willing to trust the other.

Banks, even when they lent money, put conditions such as higher down payments, and most people just could not muster up this money to buy even affordable houses since they had not cultivated the habit of saving money every month. Plastic money and easy access to funds had blinded many to splurge indiscriminately and when the crunch time came, they were found wanting.

It can be difficult to secure the kind of mortgage you need in order to obtain housing that you are happy with, especially when considering that the majority of people also have a number of credit cards that they are also finding it difficult to repay. Getting your foot in the door, is an important step to securing your own mortgage and house, however many simply don't know the best way to go about it.

However, there is a solution for such people that has been worked out and that is in the form of shared ownership housing schemes. This scheme will be useful in tackling the shortage of affordable housing and will provide some relief to genuine buyers looking for a house. Under this scheme, you need not make payment for the whole house and only need to take a particular percentage of ownership by making payment of the relevant amount. The balance continues to be owned by the housing association, which has possession of these houses. While you do have to pay the legal service, as well as rent, for the percentage you do not own, these can still be managed by you and will fall short of any other mortgage payment.

You have the flexibility to increase your share of ownership as time passes by and when you save more money to be able to afford it. In the meantime, you have to be prepared to pay a higher rent on the percentage of the house in question, not owned by you, due to inflation.

This kind of an arrangement is thus becoming a very viable option for those stranded without a house and those that cannot secure a mortgage loan. Both first time buyers and people who already have a house are finding this an ideal proposition, the former because they get a house and the latter because they can use it as a getaway home during holidays.

by: Lawrence White

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