Shared Ownership Question.

chiefo

Hi guys,

I'm a new poster but I’ve been following the forums for quite some time. Now I have a question regarding shared ownership that I hope someone might be able to answer. (I know many people on these forums think the scheme is a scam/sucks).

Now I've been in contact with an estate agent over a property and have viewed it a couple of times. I have also been to my local building society to speak to a mortgage advisor who said after speaking to someone else in the mortgage department would agree the mortgage in principle.

Moving on to Key Homes East, the agent dealing with the property I was interested in. It is valued at £165,000. 30% of the property is £49,800. 50% = £82,750.

The bank said with my deposit and full time salary that I would be able to achieve 50% ownership (LTV 76%). Deposit being £20,000. Mortgage, £62,750. (Mortgage being £300 (25yrs), £180 rent, £80 service charge)

Now my full time salary is around £19,000. Currently though I am part time finishing off my degree (final year - mature student) earning around £15,000 inc. overtime. Net pay being £1,000+.

This has been ongoing for around 3 months with the estate agents knowing my circumstances saying everything should be ok. But, I receive an email from a different person at KHE to the one I have been dealing with stating that through their ‘affordability’ calculators I wouldn't be able to afford the cheapest option being 30% of the property. I don't understand this as the building society made me complete an expenditure form detailing ALL outgoings (including rent/service charge/tv license/council tax etc) which still left me with a positive figure.

I had originally emailed KHE saying I would be interested in 50% of the property based on the banks figures but for them to turn around and say that they don't think I would even satisfy the lowest option of the cheapest property in the block quite shocking and rude. Ignoring my other questions and replying with a generic email.

Now I know many people will think I am silly for wanting to buy a property of this value in my current situation but I do have a partner who may move in at some point. I am only wanting to apply on my own though to make things less complicated.

Any ideas or honest advice is welcomed, am I being unrealistic? I just really want to rant about the poor levels of communication and consideration that I have so far experienced.

Snuggles

chiefo wrote: »

Hi guys,

I'm a new poster but I’ve been following the forums for quite some time. Now I have a question regarding shared ownership that I hope someone might be able to answer. (I know many people on these forums think the scheme is a scam/sucks).

Now I've been in contact with an estate agent over a property and have viewed it a couple of times. I have also been to my local building society to speak to a mortgage advisor who said after speaking to someone else in the mortgage department would agree the mortgage in principle.

Moving on to Key Homes East, the agent dealing with the property I was interested in. It is valued at £165,000. 30% of the property is £49,800. 50% = £82,750.

The bank said with my deposit and full time salary that I would be able to achieve 50% ownership (LTV 76%). Deposit being £20,000. Mortgage, £62,750. (Mortgage being £300 (25yrs), £180 rent, £80 service charge)

Now my full time salary is around £19,000. Currently though I am part time finishing off my degree (final year - mature student) earning around £15,000 inc. overtime. Net pay being £1,000+.

This has been ongoing for around 3 months with the estate agents knowing my circumstances saying everything should be ok. But, I receive an email from a different person at KHE to the one I have been dealing with stating that through their ‘affordability’ calculators I wouldn't be able to afford the cheapest option being 30% of the property. I don't understand this as the building society made me complete an expenditure form detailing ALL outgoings (including rent/service charge/tv license/council tax etc) which still left me with a positive figure.

I had originally emailed KHE saying I would be interested in 50% of the property based on the banks figures but for them to turn around and say that they don't think I would even satisfy the lowest option of the cheapest property in the block quite shocking and rude. Ignoring my other questions and replying with a generic email.

Now I know many people will think I am silly for wanting to buy a property of this value in my current situation but I do have a partner who may move in at some point. I am only wanting to apply on my own though to make things less complicated.

Any ideas or honest advice is welcomed, am I being unrealistic? I just really want to rant about the poor levels of communication and consideration that I have so far experienced.

Hi chiefo, firstly let me say that I understand the desire to get a place of your own, and I don't think that all shared ownership schemes are a bad idea. I bought on a shared equity scheme myself and am very happy (although I probably wouldn't buy into shared ownership/equity if I was buying in the current climate).

All that aside, I think you are being unrealistic. When I first bought my house, I was earning £19k, and my mortgage was £400 a month. With all the other bills on top it was quite a struggle. Your monthly outgoing, just on the house, would be £560. On your salary, I think this would be seriously overstretching yourself, and would leave you extremely vulnerable if something unexpected happened.

Unless you are 100% certain that your job is safe, and that your salary is likely to increase fairly quickly, I think it would be a massive risk.

parisjordana

Have to agree with the above poster I know its probably not what you want to hear but unless you have any other income coming in on just what you have put down you would find it very difficult.Im sorry.

jinglebell

I am looking to buy a shared ownership property at the moment. I was originally aiming for 60% of the property, but after doing some research, I changed my mind and now looking to buy 25% ( the minimum share). In this case, I could pay back the mortgage fairly soon and start saving more by only paying for the rent plus service charge.

Try not to be put off by one mortgage advisor/buiding society/bank advisor. Contact as many mortgage advisors as possible and compare what they say about your situation. Even two people from the same company may give you different opinions.

Personally, I think you would be able to get a mortgage to buy 30%/25% of the property. You won't be too stretched. With your deposit in place, you may be offered a better rate.

Good luck.

chiefo

Thank you for the replies, I really do appreciate hearing from other individuals.

A little extra information that wouldn't in anyway enhance my application with KHE as I applied for single status is that I have a girlfriend who would like to move in (from what I have read it is allowed). She said that she would pay me rent (though I wouldn't ask for a lot) and offered to contribute towards any bills. We’ve only been together a year hence applying alone.

I don't understand how KHE can be so blunt saying 'no' when I have provided them with figures and information from my building society stating that they would lend up to 50%. Surely then that would mean that 30% would even be more affordable as the mortgage would be based on £29,800 rather than £62,750. Granted the remaining 'rent' would be higher on the HA share but it wouldn't be that much more.

Snuggles, regarding my current employer. I work for a local authority. Have been there for a number of years and have increments each year as well as further room for career progression.

Jinglebell, the bank/building society/advisor said that they would lend, it is just housing association saying that I can't afford it. Even though experts who have won a number of awards for their mortgages say that I can.

I'm not sure if this has anything to do with not going to see the FA at the estate agents who are handling the property. I understand that they would receive commission if they found me a lender.

Still, I am in no rush, the longer I wait the more I save. Fingers crossed the prices won't be on the up any time soon.

Thanks again.

Lara44

Jinglebell, we are in the same situation. With quite a big deposit buying a smaller share works in terms of leveraging the LTV ratio to get the best bank rates.

At the moment it works out that we could buy a 1 bed flat on 25% share for the same cash as we are paying to rent one room. Chiefo - buying a smaller share might actually work out better for you in the longer term. We are very cautious buyers in that we want to still be able to save, even with our combined mortgage, rent and service charge and provide a cushion in case of big future rate rises.

Trying to work out if it would be better to look at a 2 bedroom apartment to provide a bit of future proofing. As prices will not rise on a new build for years to come, and there's no opportunity to improve the property. If we bought a 1 bed place we would be looking at moving after 5 years or so to start a family.

Be nice to hear how you're getting on.

Fire_Fox

If you read around the Debt-free Wannabe board you'll find a general agreement that paying half or more or your salary in mortgage/ rent/ service charge is unaffordable. You can't rely on your partner's input as relationships often don't last: you might be able to rely on letting out a second bedroom if there was one tho? I would suggest the housing association are far more concerned about affordability than the other sources you quote, as evicting tenants in financial difficulties is not ethical. Banks and estate agents don't generally have the same moral stance (but they do have your deposit).

geoffky

wait until the rates start to go up..we are going to have so many who can not afford the hike in payments..

gabyjane

Hi we have a SO property (40%) and the figures you gave are similar to what we paid/now pay apart from the deposit. We never needed one apart form a £150 reservation fee so when i saw the £20k i almost died! if you want any info pm me but i too am confused as to why you would be refused?..

gabyjane

also meant to say our rate when we took it out ws over 6% so not sure how we stand in august next year when things have to be redone as fixed till then..will have to wait and see how things pan out.

Taadaa

This KHE can sell to whoever meets their criteria. They don't want to end up with a share of their property being repossessed and effectively owned by the bank, for them to sell to whomever they please. I suggest if this situation is temporary because of your studying, to wait until it increases in three months. I also suggest you speak to a mortgage advisor because you might be able to purchase on the open market at a later date.