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Date of purchase
30 March 2004
Owner-Partner
Mr N
Purchase price
£149,950
Date of birth
17/06/80
Type of property
2 bed I bath house
Salary
£18,200
Rent pcm
£750
Address
Takley, Herts
Owner share
50%
Post code
Xxx xxx
Investor share
50%
This page is intended to give prospective owners and investors an idea of what they could expect from Joint Equity ownership.
2004 - Mr N is a 23 year old working in the IT industry, earning just over £17K a year. He had been renting a flat for 2 years locally, and wanted to buy his own home to benefit from the high levels of property growth around Stansted airport.
He wanted to buy a 2 bedroom house with a garden at £149,950, but his salary would only permit a mortgage of £68,400. He had savings available of £10,000, which would leave him short of £71,550 and unable to buy his chosen home.
An actual purchase in March 2004 Page Redirect
Not the actual property in the case study
Through the Joint Equity Scheme this shortfall is provided for by the Investor-Partner, with the effect that Mr N gets his chosen home!
The illustration below shows how Mr N and his Investor-Partner bought his home, and the costs, earnings and savings achieved by both.
See typical costs for full details of who pays what.
The purchase was made in March 2004 and the case study values the investment 1 year later in February 2005 and shows a 103% profit on the original investment in just 1 year.
► Property Details
In this section:
► Projections March 2004
Revenue returns
Monthly
Annually
Return on investment
Owner saving on rent
80.00
960.00
13%
Investor gross income
375.00
4,500.00
Less JE mgt fee - 10%
-37.50
-450.00
Investor mortgage
-295.00
-3,540.00
Net investor income
42.50
510.00
6.8%
Total
Owner Partner
50%
Investor Partner
50%
Return on investment
Value
197,500
98,750
98,750
Cost March 04
149,950
74,975
74,975
32%
Capital growth
45,000
22,500
22,500
Investment March 04
17,270
8,635
8,635
Profit
27,730
13,865
13,865
161%
Total
Owner Partner
50%
Investor Partner
50%
Return on investment
Value Feb 05
184,950
92,475
92,475
Cost March 04
149,950
74,975
74,975
23%
Capital growth
35,000
17,500
17,500
Investment March 04
17,270
8,635
8,635
Profit
17,730
8,865
8,865
103%
► Capital growth to February 2005
► Capital growth to September 2005
Total
Owner Partner
50%
Investor Partner
50%
Return on investment
Value Sept 05
194,950
97,475
97,475
Cost March 04
149,950
74,975
74,975
30%
Capital growth
45,000
22,500
22,500
Investment March 04
17,270
8,635
8,635
Profit
27,730
13,865
13,865
161%
► Capital growth to July 2006
July 2006 Mr N has now decided to sell as his personal circumstances have changed. His Investor Partner has decided not to buy him out and they have decided to sell up completely.
The Estate Agents have a guide price between £195,000 and £205,000 and its now on the market for £197,500. We will update this appraisal as soon as the sale price is agreed.
The Joint Equity Scheme is for first-time buyers, home owners and property investors. This site is developed and maintained by Joint Equity ltd. ©Joint Equity (2006)
Joint Equity Ltd works with Mortgage Beaters Ltd to provide case studies & Illustrations to prospective Owner-Partners & Investor-Partners. Joint Equity Ltd does not carry out any regulated activities and so is not regulated by the FSA (Financial Services Authority). Joint Equity Ltd are introducer appointed representatives of Mortgage Beaters Ltd, which are authorised and regulated by the Financial Services Authority.
The content of this website is accurate to the best of our knowledge and for information only. We do not provide financial advice.
Important Note:
This case study is intended to demonstrate how an investment in a property could grow by reference to an actual example that we track over the years since it was bought in 2004.
It does not reflect the changes in monthly costs as the interest rate charged by the lender for the mortgage changes.
The interest rates for this case study in March 2004 were:
• Bank base rate 4.0%
• Mortgage rate interest only 5.25%