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Shared Ownership, is it a good idea?

mikemessa
mikemessa Posts: 26 Forumite
in House buying, renting & selling
Hi there, I am currently looking to purchase my first property but have limited funds. I was wondering if shared ownership is a good idea or is it not worth pursuing. If I got a normal mortgage the 10% deposit would leave me with no money. Is there anything our there where a 5% deposit is satisfactory?

Thanks
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Comments

  • Lizling
    Lizling Posts: 882 Forumite
    If it's the deposit that's the problem, would saving up the 10% be possible or are you paying rent that's a lot higher than the rent+mortgage repayments would be under shared ownership?

    I think shared ownership has its place when the repayments would be very affordable to you, but it would be difficult to get a big enough mortgage on your own. Beware though, from what I've seen, most shared ownership homes are massively overpriced, especially the new builds.

    5% deposits are enough for a few lenders now if you've got an excellent credit history or in a few cases if you have a guarantor(e.g. Lloyds Lend a Hand mortgages).

    Just sent off for details on a shared ownership flat myself, so looking forward to reading everyone's responses.
    Saving for deposit: Finished! :j
    House buying: Finished!
    Next task: Lots and lots of DIY
  • mikemessa
    mikemessa Posts: 26 Forumite
    Hi Lizling, thanks for your feedback. The thing is I have the deposit money (just about) however thats all I have. So if I do get a normal mortgage I am left with zero in my bank account. Maybe I should wait a bit longer before I commit however there are some new builds near my area that I am really interested in and I am concerned it may all be sold by the time I save more money. Thanks
  • The-Joker
    The-Joker Posts: 718 Forumite
    mikemessa wrote: »
    Hi there, I am currently looking to purchase my first property but have limited funds. I was wondering if shared ownership is a good idea or is it not worth pursuing. If I got a normal mortgage the 10% deposit would leave me with no money. Is there anything our there where a 5% deposit is satisfactory?

    Thanks


    Shared ownershipt is only a good idea if its with someone you know and trust, like family member. All sorts of problems like when something needs moneyspent on it, you have to agree on if to do a cheap quick job or spend more on better building materials or whatever.

    What about when the time comes you need a new kitchen or bathroom, very hard to agree.
    The thing about chaos is, it's fair.
  • saayinla
    saayinla Posts: 122 Forumite
    First Post First Anniversary Combo Breaker
    The-Joker wrote: »
    Shared ownershipt is only a good idea if its with someone you know and trust, like family member. All sorts of problems like when something needs moneyspent on it, you have to agree on if to do a cheap quick job or spend more on better building materials or whatever.

    What about when the time comes you need a new kitchen or bathroom, very hard to agree.


    I think the OP is referring to Part buy part rent Scheme, not a joint ownership thing.
  • mikemessa
    mikemessa Posts: 26 Forumite
    Hi guys, yes I meant part rent, part purchase scheme. Thanks
  • shinydiscoballs
    shinydiscoballs Posts: 26 Forumite
    I bought a shared ownership property and I love it. I bought a resale property because they are cheaper than the new builds (Guess its like buying a new car instead of a used one) and I checked how much the flats were selling for in the area and made an offer based on that. I got the flat for £5000 less than asking price.

    I now live in a two bedroom flat that I can grow in to and would never have been able to afford on the open market. The service charge and the rent equal the same as the private rent in the property but at least I'm contributing to something!

    Don't underestimate how much you will need, they say 5% deposit but its unlikely that you will find a mortgage company that will accept no less than 10% deposit plus you need another £2.5k for the legal bit. I got in touch with a financial advisor as there aren't many mortgage lenders for shared ownership.
  • DizzyGherkin
    DizzyGherkin Posts: 14 Forumite
    It's a great move for first time buyers - my wife and myself would never have been able to get on the ladder otherwise.
    In the long run, it probably costs a bit more, however with deposits required these days, at least you can get on the ladder quicker.

    We purchased a brand new flat it it's been amazing. We are now looking to move onto the 2nd step of the ladder and get ourselves a bigger place fully owned by us!!

    Back when we purchased our place Shared Ownership was relatively new and not a lot of lenders, or solicitors seemed to know to much about it however nowadays its a lot more common and I would expect the process to be a lot easier.

    Its certainly worth considering...
  • jellybabes
    jellybabes Posts: 127 Forumite
    I agree with both the above post, we are in a shared ownership and would never have been able to afford a whole house, we have the option to buy the other half of the house if and when we want to.
    It s has been a real help getting us on the property ladder.
  • mikemessa
    mikemessa Posts: 26 Forumite
    Thanks guys for all your feedback, its nice to hear there are happy customers as oppose to negative feedback. I hear that when you want to sell the place its more difficult. Has anyone had bad experiences with the selling part?
  • jozbo
    jozbo Posts: 334 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    a colleague of mine is having real difficulty selling hers on - i think it's been on the market a year and she's getting fed up.
    i would think that as long as the place is big enough and in an area you're not only temporarily tied to it should be a good bet.
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