Shared Ownership/Part buy, part let schemes

ricicle86

Hi all,

If anyone could offer any advice or suggestions, i would be really grateful...

BACKGROUND INFO:
I moved to the outskirts of London last September, renting a 1 bed flat for £725pcm. Been at college for a year with only a £7,000 grant from sponsor firm & £6,000 graduate loan (repayment holiday till Jan 2010) + partner's income. Been struggling, but had to be done!

I start work in January 2010 on a minimum 2 year contract - salary = 1st year £36,000, 2nd year, £42,000, on qualification £50,000+. My girlfriend also takes home £1,400 pcm AFTER tax (roughly £20-21,000 pa gross?). So joint income will be minimum £57,000 and rising year on year.

THE ISSUE:
We want to move into a house (or at least a 2/3 bed place = 3 bed less than some 2's only reason!) and i've budgeted £1,000 pcm for rent, after everything else i should be able to save £400 - £600 a month (depending on how much i want to 'live'). Partner should be able to save half this. This money was going towards a deposit...

However, i still struggle to work out how a bank can lend a LL money for mortgage based on the rental income as security (ie: my rent!!) (obviously not just this!!), but cannot lend me a mortgage to save me paying the same rent for no reward.

Essentially i want to know whether going for a shared ownership scheme would be better than paying £12,000pa in rent and trying to save £5,000pa to go towards a deposit?

Don't really know how the shared ownership works but will be browsing these forums for more info.

Not sure what to do - rent & save (have to wait 2/3 year to buy own house whilst paying out nearly £40,000 in rent in the same time) or go for shared ownership so i can up stake as income increases and not waste all my money paying rent?

Problem - i have no deposit at the moment, student loan to pay off (automatic from PAYE deductions), graduate loan to repay (£150? pcm i think), 2 credit cards (£500 on one, other empty), 0% graduate overdraft need to repay some soon.

Hope this makes some sense - any advice or what you would do would be great.

Thanks;)

cattie

Well you have no deposit, so no chance of getting any kind of mortgage, even with shared ownership.

You need to save as much as you possibly can over the next couple of years before you even think of becoming a homeowner. You are going to have an excellent income, so no reason why you won't be able to accumalate a decent deposit.

In answer to your question, landlords are granted mortgages on buy to let properties because they put down a 25% deposit & have the rent as income to help pay off the remainder of the mortgage, combined with any other income they have.

Shared ownership isn't rated highly here you'll find. It's a very expensive way of buying & you're still commited to finding rental payments each month, along with service charges.

Save, save, save, that's the best advice anybody can give you.

Jowo_2

You've got me confused. You are currently paying £725pcm but expect to pay £1000 pcm when you get your new job, but then have subsequently calculated you will spend 40k in rent over 2 to 3 years which is approx £1100 to £1600pcm, so considerably over your proposed budget.

Can't you just stick with a 1 bed flat for a couple of years on the current rental rate and trouser much more in the way of savings from the minimum 57k gross you anticipate?