Shall I, or Shall I not?

stevens001

Hello, I'm a first time buying looking at shared ownership. My wage is only 18k basic, plus i get overtime

I take home around £1,150 a month. Plus another £100.00 for the overtime

I found a 50/50 shared ownership house with 2 beds and a garage. The 50% for sale is £55,000. Plus, the house is a leasehold.

The best mortgage i founds was from abbey. 3yr fixed at 5.89%. So that is around £300.00 a month. my rent would be £210.00 per month.

So after all the bills and food, i would be left with about £150.00 to myself.

What are your thoughts?

LittleMissAspie

I think you can't afford it. £150 per month will not pay for entertainment, furniture, holidays, new boiler, clothes, car repairs, presents, redecoration, haircuts etc etc etc.

Where are you living now? If you're with your parents, could you ask them if you can go without paying them rent so you can save for a mortgage? Then save 1k a month and see how you go.

poppysarah

What's 3.5% your salary?

stevens001

3.5% my salary is around 61k i think. i have about 18k in savings at the moment.

poppysarah

When you can buy the whole of a property you can live in for tnext 5-10 years for 61k then buy.

Shared ownership is on of the biggest cons ever imo.

Cannon_Fodder

So the 100% price is £110K, you have £18K savings, so make say a £11K deposit - as you should keep £7 back for emergency funds in these times - means a £99K mortgage *SHOULD* be the way to make this purchase.

As that would mean 5.5x multiple on your salary, that's pretty unachievable, and relatively expensive because of the 90% LTV you would have.

Throw in the immediate negative equity, as most commentators are predicting prices to continue downwards in 2009, and stagnation to follow, which could make re-mortgaging painful in 3 years, when moderate(?) inflation has kicked and cause interest rates to be pushed back up again...

Which is the long, other way round of saying what poppysarah has said...

You cannot afford it...

...let alone save while doing it, so how would you eventually buy the other 50%...?


http://www.shared-ownership.org.uk/

"Who does the repairs on shared ownership properties?
The shared ownership lease between you and the housing association will set out your rights and responsibilities as a shared owner. Although you have not bought the property outright, you will have the normal rights and responsibilities of a full owner-occupier. In particular, you will normally be fully responsible for the cost of repair and maintenance to your home."


And, you only pay for 50%, but have "full responsibility for the cost of repair etc"...unlike a true rental property where the landlord has to cover those expenses.

Running_Horse

How much of that £150 will be left when the overtime stops and interest rates rise again?

poppysarah

And if you need to leave then you might have trouble selling, may be unable to sublet etc