I have some deposit, is it a good time to buy??

jinglebell

The flat I am interested to buy is a new build with two double bedrooms in west london. It was built last year and most of the flats were sold at that time at around 230k. Now the price dropped to 197k. From there,I only need to take one bus to work costing 40 pounds/month.

I am currently paying a rent of 900/m in southwest london and monthly transport to work is 85 pounds.

I understand many people on this website don't favour sharedownership. I have done my research and am fully aware of its downsides. But I am desperate to save some money over rent and I can't find anything we like under 900. if I see this scheme as an alternative way of cheap renting rather than owning a home, would I benefit from it at all?

I have a deposit of 30k. I could afford 60% of the new build flat price, but considering all the problems hidden behind the scheme, I am thinking about buying 25%. I have the ability to pay back the mortgage ( around 20k) within 2 years, so that I don't have to pay too much interest. After 2 years, I will just be paying the rent of the other 75% plus service charge. Even the service charge goes up, the rent plus service charge will still be well under £500.

I know some people call this scheme a scam. But at the moment, I if we keep renting, we will lose 12x£900/year and we can't really save much.

My husband and I are both under a lot of pressure trying to make a decision. Please offer some advise.

pinkshoes

Renting is not losing money, as you need to compare rent to the interest on a mortgage.

£900 a month in rent is approximately the equivalent of a £215k mortgage (with 5% interest).

So if £60% of this flat would be £196.5k, then it's full cost is £327.5k. Assuming you put down a 10% deposit, then the interest on a £294k mortgage would be £1225 a month (5% IR), which is definitely more than the £900 a month rent...

jinglebell

pinkshoes wrote: »

Renting is not losing money, as you need to compare rent to the interest on a mortgage.

£900 a month in rent is approximately the equivalent of a £215k mortgage (with 5% interest).

So if £60% of this flat would be £196.5k, then it's full cost is £327.5k. Assuming you put down a 10% deposit, then the interest on a £294k mortgage would be £1225 a month (5% IR), which is definitely more than the £900 a month rent...

Sorry, I may not have stated clear in the post. 197K is the full price of the flat.

And I am planning to get 25% instead of 60%. 25% of the flat is around 50k. Taking my deposit off, I need a mortgage of 20k. Therefore, I think renting is wasting money.

BexInLondon

I bought 25% of a shared ownership flat 3 months ago. Having watched lots of friends do it over the past 3 years I knew it was right for me. I'm now paying out less than I was when I was renting a horrible house that was poorly maintained. It's nice to know we can't be moved on by a landlord's whim. Whatever is said on this site, having seen it work well for at least 10 other couples I know, and being installed in a lovely flat myself I'm convinced that, in London at least, Shared Ownership is a very viable option.

lonestar1

jinglebell wrote: »

Sorry, I may not have stated clear in the post. 197K is the full price of the flat.

And I am planning to get 25% instead of 60%. 25% of the flat is around 50k. Taking my deposit off, I need a mortgage of 20k. Therefore, I think renting is wasting money.

Assuming you do take 25% do you know how much rental on the other 75% would cost ?

jinglebell

lonestar1 wrote: »

Assuming you do take 25% do you know how much rental on the other 75% would cost ?

The other 75% is 339 pounds per month. plus service charge of 100 pounds, which is 439 in total.

robin_banks

Are you eligible for the scheme?, you must earn less than 60k for a start.

Priority is given to LA/HA tenants that may are willing to give up a flat, some have restrictions that you must live or work in the borough where the property is for sale.

But why don't you buy 100% of a flat that costs 197k ?

jinglebell

robin_banks wrote: »

Are you eligible for the scheme?, you must earn less than 60k for a start.

Priority is given to LA/HA tenants that may are willing to give up a flat, some have restrictions that you must live or work in the borough where the property is for sale.

But why don't you buy 100% of a flat that costs 197k ?

To answer your last question, I can not afford to buy 100%. With my salary, I can only borrow about 100k. With the deposit, I can buy a property around 130k.

We are eligible for the scheme.