First Time buyers, part rent - part buy

huddsta

Hi all

My girlfriend and I are currently looking for our first house together. We have seen a nice Mid Town house on the market, being sold as 55% for % £56k ownership and 45% housing association.

I'm 19, earning just shy of £12k as an apprentice Engineer. My Girlfriend is 17 and earns just under £10k.

We understand that due to my girlfriend being 17 she won't be able to take out a mortgage with me, however, I believe I can get the mortgage myself after getting rough quotes online.

Our main questions are

1. Are there any huge pitfalls/disadvantages to part rent, part buy?
2. Do we need to offer the asking price or can we go in just under?
3. If I have the mortgage myself and my girlfriend pays me rent then would I have to declare it as income?

I'm booked into see the Mortgage advisor this week so want to know where I stand and what to expect.

Any help or advice would be appreciated.

blue_monkey_2

Don't forget you will have to pay rent on this as well. One thing to ask about, a relative of ours went for shared ownership but found out that a % of the house would never be his but always belong to the HA so they did not bother. Just be sure to make sure you read all the small print, that's all. While it is the easiest way to get a house these days (and I know as we don't have enough money for a house) just make sure you know what you are getting into before you get too excited. The other stuff I can't advise on, sorry.

Sparky67

I used to own a shared ownership property and I really liked the scheme. The way my one worked was I bought 25% (part cash and part mortgage) and rented the rest. It worked out a lot cheaper than buying 100%, but let you get out of just renting. It let me move from my council house to a private housing estate.

You were responsible for all the maintenance though (so bear these additional costs in mind) but the Housing Association (HA) paid the buildings insurance. Most HA just let you get on with it, but you need to ask permission to make any alterations to the building (not unreasonably witheld).

When you come to sell, you get the same proportion at the value it is when you sell, whether that has gone up or down (but value will disregard any improvements you have made that increased the value).

You buy the shared bit the same way as any other house purchase (if on the open market) so you can put in an offer (but depending on popularity in your area that might not be accepted). If its being marketed directly by the HA then it might just be a standard price. You will need a mortgage offer in principle to show to the HA and they will need to approve your application as well (to make sure you can afford it and can't afford to buy in the open market).

Most shared ownership schemes allow you to purchase further shares (usually in blocks of 25%) from the HA if and when you can afford them, sometimes eventually to full ownership (you then own it same as anyone else), but in some rural areas ownership is capped to keep the house in the "social" sector.

I'm not sure about the rent as income as that's more a tax question, but hope this helps!

huddsta

The rent is £130 p/m.
My girlfriend works for another HA and recons that the one we are looking at, being one of the largest in the area, will probs release more % per year.

Sparky67

Also, bear in mind that not all mortgage lenders like Shared Ownership. I was with the Nationwide and they don't have a problem with them, but some building societies do, so bear this in mind when looking for a lender.

lynzpower

Do the totals. For my shared ownership a month, It would cost 780 inc service charge. A mortgage elsewhere WOULD be cheaper than that, and half the money IS going to the housing association.
xx