shared ownership advice

haleyhop

Hi guys i was just wondering if you could lend me a little advice?
My partner and i currently rent a 2 bed semi which costs us £550 for rent, and i have recently looked into shared ownership schemes and they all seem to be around £70,000 for a 2 bed semi in the same area.
Now im no maths genius but i have had a look at some mortgage quotes and they are working out at around £480 a month over 25 years.
My thoughts are that if we go down this road we will at least be investing our rent money in the future, where as right now we are not gaining much in the long run (except from a lovely home), but my partner is confused by the scheme and thinks its all a con.
Any advice would be greatfully recieved :rolleyes:

many thanks

Tiddler_2

With most shared ownership schemes you still have to put down a deposit of 5% of your share, plus don't forget that you will still have to pay rent on the other part of the property.

getmore4less

How much of a share?

what are the terms of the other bit, rent, when can you buy it, what happens if price go up or down,how easy to sell on, etc.

Working on the full value of a place give you a fare(ish) comparison with renting, but owning costs more than renting so you have to factor that in as well as the other things like, not being able to move quickly, if you lose your jobs benifits are harder to get etc. against it is your(a bit of it) place and a potential longer term home.

Current mortgage rates are around 6% so 0.5% per month is a good rough guide for the renting of the money to buy a place.

£550pm pays the interest on around £110k so if the full value of the place is less than that it might be worth a more serious look, if more you are probably better off staying in rented.

If you look at a mortgage calculator(www.whatsthecosts.co.uk) and the details you will see that on a £70k loan over 25 years the payment is £452pm made up of £350 interest and just over £100 capital, you also have another £100pm to save up to by the other bit so you will slowly build up some equity, £2400 in the first year

The other side to this is that prices are falling so if you say 10% over the next year, thats £7K a lot more than the equity you are buying, I would wait even if the numbers do stack up.

Also keep an eye on the rental market to make sure you are not overpaying.

Remember that if this is not the ideal long term place there is the costs of changing houses(sell/buy) and this can wipe out the equity you build up over a year or two, in a falling/static market there is no uplift from rising prices so it can be worth delaying the purchase saving up and skipping a step on the ladder.