Barclays Woolwich Mortgage: Property Ladder-2

Joint tenancy agreements

• Particularly appropriate for those in stable cohabiting relationships but perhaps not those with children from another relationship.

• On the death of one joint tenant his or her interest in the land passes automatically to the other joint tenants.

• Your share of the property cannot be transferred under will or intestacy.

• Everything is jointly owned in equal shares, including the property itself, and any profit or loss made when you come to sell the property.

• All parties are liable for the loan and if one person defaults, the lender can pursue the others for the full amount.

• In the event of arrears everyone will receive a bad credit rating.

• The property cannot be sold without the consent of both parties.

Tenancy in common

• Particularly appropriate for buyers who are unrelated friends, family members who are not cohabiting couples (eg siblings) or where the purchasers contribute unequal amounts to the purchase price.

• Each purchaser holds a distinct fixed share of the property, which may or may not be equal.

• The share is not affected by the death of a fellow co-owner. When a tenant in common dies, his interest passes under his will or intestacy. It is his to dispose of as he wishes.

• All parties are liable for the loan and if one person defaults, the lender will pursue the others for the full amount.

• In the event of arrears, everyone will receive a bad credit rating.

• If one person moves out and the others decide to buy their share, they will be liable for stamp duty on the full value of the property, if it's worth more than the relevant threshold.

• It's recommended that before entering into a Tenants in Common agreement you seek independent legal advice.

Pros

• You're on the property ladder.

• You can potentially get a better mortgage deal and there's possibly less financial pressure.

• You're living with people you already know.

• You can possibly afford a bigger property.

Cons

• If one party doesn't pay, the lender can pursue the other borrowers for the full amount.

• Living with friends can cause disputes and cause even the closest friendships to end.

• In the case of a tenancy in common, if one party decides to sell and you want to buy their share, you may need to pay stamp duty on the full value of the property. This will also increase your mortgage and associated costs.

Some other options

If you don't want to live with friends or family, there are a range of ways the Government can help your property dreams become a reality.

Key workers

If you have a 'key' occupation, such as nurse, teacher, social worker, police or community support officer, firefighter or prison and probation officer, and you live in London, the south or east of England, the Key Worker Living Scheme, funded by the Housing Corporation, offers a range of help to get you on the ladder.

The programme offers:

• Equity (Homebuy) loans of up to £50,000 towards buying a home.

• Higher Homebuy loans of up to £100,000 for London school teachers who have the potential to become leaders of London’s education system.

• Shared ownership of new properties.
When you sell your home, the Housing Corporation gets its money back, plus a proportional share of any increase in the value of the property. However, if you leave your job and are no longer eligible for the scheme, you will usually have to pay the Housing Corporation's money back within within a set time period.

Shared Ownership

If you can't afford to buy your own home, Shared Ownership schemes allow people to buy a property with a Housing Assocation. You pay a mortgage on your share of the property and pay rent to the Housing Association for their share – which can be between 25% and 75% of the property.

You can either buy a house that's been built or bought by the housing association or find a property on the open market and ask the housing association to help you buy it.

This scheme will allow you to have a smaller mortgage and, together with the rent, this is usually cheaper than paying a large mortgage on its own.

How it works:

if your share costs less than £125,000, you won't have to pay stamp duty. Each year, you're able to increase your stake in the property, usually in 25% chunks and, as long as your new share is under £125,000, you won't have to pay stamp duty.

When you sell up, the profit will be divided between the owners and the housing association, according to what share you each own. Before entering into a Shared Ownership Scheme we suggest you seek independent legal advice.

Need to know:

each housing association varies, but all owners must individually and jointly meet the eligibility criteria.

Find out more For more information on these schemes and to find out whether you are eligible, check out these websites: ● Communities & Local Government For advice and information on schemes. ● Housing Corporation For information on Shared Ownership and contact details for the housing associations in your area. ● Key Worker Living For information on who qualifies, how to apply and contact details. • You can also contact your local authority to find schemes in your area.

Link to previous articles: Barclays Woolwich Mortgage: Property Ladder Checklist for Buying a Home Barclays Woolwich Mortgage FAQ Barclays Woolwich Mortgage Glossary Barclays Woolwich Mortgage Reserve Barclays Woolwich Mortgages: Buy to Let Mortgage