2 Qs: Keyworker home ownership & the best time to sell when there’s building work due

Cats_pajamas

I purchased my one bed flat with the help of an interest free loan (about 28% of the total price) from the London Mayors office Key Worker initiative. They will receive the money back with pro-rata profits on sale of the property. I currently have a Nationwide mortgage which as at Dec 2005 had £95,000.94p outstanding (4.95% due for review Feb 2007). :A

Recently, my OH (a lovely man who I have been with for 4.5 years) and I have been thinking about getting a place together.
I have some debt but have a credit score of roughly 785. OH hasn't got a good credit rating and has some debt. He is a contract worker with twice my earning power.

I could probably free up deposit money by selling my flat and he would be able to bring home more of the repayments (I am thinking we sort of complement each other). :kisses2:

One consideration is that there is a substantial amount of work planned to improve the common areas in my building. All flat owners in the block have a share of freehold and there is approx £100K in place for the work. My gut tells me that I should wait until after this work to sell as it should add to the property value. I know of another person in the building who sold and didn't hear a word about this money at any point and didn't think to ask.

If I sell the property, the terms of my relationship with the key worker scheme will change. Now, if I leave my employment, I don’t have to give the money back until I die or chose to sell. If I sell, I would have to give the money back, reapply (and not necessarily get the loan again) and I would have to sell the property within 2 years of leaving my work for the NHS.

One option that appeals to me involves my holding onto my property with a view to renting it out for a little while and working with OH to help him get his own mortgage, and then both sell and buy together a little while in the future.

There are a few points I would like to canvas advice on…
1) Purchasing a bigger property seems to be a better investment that would be likely to offset the potential loss in profit that might happen if I sell before the work is done? So should I buy now or wait until the work is done?
2) What are the options to buy when one party has a poor credit rating?
3) Any other thoughts from people who know about the key worker initiative..?

I would really appreciate any advice.

Thank you,
C

cattie

I have to say I'm not sure of the morality of letting out a property bought under the Keyworker's Initiative. . You'd need to check the legality of this too.

As far as the improvement works are concerned, you may find it harder to sell the flat before they are carried out. Potential purchasers may worry that they will have to pay a large sum towards any shortfall of the maintenance fund. Costs for buiding & improvement works are notorious for running far above what is estimated.

Wouldn't it be a better idea for you bf to move in with you thus save rent & both save as much as you can for the next year or two towards a joint home of your own?

Cats_pajamas

Thank you,
I agree that I shouldn't take advantage of the Key-worker loan to rent the property but I think that it can be done over a short period and I wouldn't have a problem being above board with the administrators of the loan. I have a friend who went abroad for a year and set everything up properly without a problem.

I have got myself elected to the board of directors for the building so that I can monitor the work that is planned. But I appreciate the point you make about shortfalls - I hadn't thought of that. £100K sounds like such a lot of money...

I also agree that we should be living together to save money but Bf was living here and the flat was just too small for both of us so we got under each others feet. He is paying very cheap rent at the moment - I am the one with the higher overheads, which has been a challenge particularly because he was paying his fair share until he moved out. I am doing better than I thought I would though partly due to this site. I feel I need to say that he is enjoying his space and still stays with me at times.

We are making changes to how we spend money which I am delighted with. This year for our birthdays (in the past 3 weeks) we got presents for each other that wouldn’t have cost much more that a tenner, where last year we would have spent several hundred it felt like money was growing on trees. The presents this year will be valued a lot more…

lynzpower

Personally, I would question whether moving is such a moneysaving option. Is there no chance your OH could not live in your current place?

My understanding is say the mayors office gave you 50% off a 100k flat, both putting in 50K, the flat sells for 150k, you have to give them the proportion of the profit you make ( ie you'll only come out with 25k not 50k in this scenario)

I was going to take this scheme but the job thing was too much risk for me ( im a social worker, part qual) and the move from state to potential charity sector ( ie going ot work for barnados instead) was too risky for me. I do believe that its very "outside" circumstances you will get this option of keyworker loan again.

IM with Catty on this one, cant you both stay put there and save save save? Improving your OHs credit rating? In any case if his rating is a bit shot, you may end up paying over the odds for your mortgage. IN which case the work on the place will be done, your likely to get even more equity. I dont know where your based, but there MAY be a trade off in having a BTL mortgage on your current place with the KW input. I dont KNOW whether you HAVE to have a BTL mortgage on somewhere your renting out ( someone else should be able to tell you) but on my shared ownership flat there is an explicit clause that the flat cant be sublet.

Best of luck, whatever you decide.

Cats_pajamas

I am hearing you. I will have a talk with OH. He is stubborn though and sometimes I find it hard to talk with him about money...
It all suddenly seems alot more straightforward than it did a few hours ago. I think I was hoping for a magic/creative solution when bottom line is - its all down to us - and saving
Thanks,
Any further ideas are most welcome.
Cat