100% Mortgage or shared ownership?

zincoxide

Made up our mind last night that we need to finally get on the property ladder.:eek:

Here is our current situation:
We are renting in Berkshire for £800pcm excluding bills. We have a 2 bed flat with off street parking for that price.

The OH is classified as a key-worker but we have no savings at present. So we are posed with a choice:

1. Do we opt for shared ownership so that we start building some equity no matter how small?

2. Do we go for a 100% mortgage and pay a higher lending charge?

Our incoming is pretty good, £68k joint per annum with only one commitment of £100 per month.

Now I'm conscious I will need to save a couple of thousands for fees etc either way, but am confident I can raise this in a couple of months if I pull the belt a bit tighter. But I'm looking for advice from perhaps a good broker and people who have either taken the shared ownership or 100% mortgage route?

We would be looking for a 2 bedroom flat/house in or around the Acton/Chiswick/Hounslow area with off street parking or a garage if possible.
Preferably one we can move into and it be livable (i.e. maybe just a lick of paint) in the immediate future until we get money under tight control!

Thanks in advance!!

ukmonkey

zincoxide - have you looked at the costs of shared ownership? I think you'll be up-pleasently surprised as the cost.

For example, at 75% us - 25% Housing associate, one that I spotted, we'd need a mortgage for a shade under £100k, we'd have to pay rent of circa £170.00 per month, and also maintainence charges of about £65 per konth.

To me, this was a rip off, so we've gone for a 100% mortgage (on a cheaper property) instead.

I'm not saying that shared ownership ISN'T for you, all I'm saying is that you need to look at it in more details.

Hope this helps!

Good luck!

maryjane01

Not all 100% mortgages have the higher lending charge. Our broker is applying for a Royal bank of Scotland 100% mortgage for us with no higher lending charge (tracker 0.89% above base rate, currently 5.39%). It may be a broker only deal as I had previously gone into a RBS branch and they did have the Fee on all their 100% mortgages. They determine how much they will lend based on affordability. We earn just a couple of thousand a year more than you (just over £70,000). Get yourself a good broker. If you can afford to buy your own place, why do you only want to own half and pay rent on te other half?

ukmonkey

maryjane01 - this is the mortgage that we're going for, I think. It is a tracker rate, not sure of the rate, and I'm not sure about higher lending fees.

Who is your broker?

zincoxide

Ok - I've had a chat to a couple opf work colleagues who say there are companies out there that will pay the majority of your fees with the exception of the survey (I can get that cheap anyway!).

I'd like a repayment mortgage over 25yrs with no penalties for paying more than is required each month (I get a quarterly bonus and want to put this in to clear the mortgage asap!).

As you may have guessed, I'm kinda clueless at all this - I've read loads of different pieces of advice but just end up with conflicting information each time!

So to summarise, we earn £68k between us (more when you take bonus & overtime into account). I'm looking at properties between £190k - £200k and a repayment mortgage that does not penalise when I pay more. It would also be great if that company would also pay as many fees as possible for us!!

maryjane01

Time to start looking for a good broker! There are some good magazines (though a bit pricey at about £4 each) about mortgages that might help you understand all the different types of mortgages available. I bought one once and it helped me learn quite a bit. You can find the info on the internet for free of course but I liked being able to flick through a magazine and pick it up and put it down. If you go into WH Smiths you should find 3 or 4 to choose from I think. There are a lot of good offers for 1st time buyers and graduates.

zincoxide

Just thinking about this again?

How would I go about figuring out what is better financially over 2 years?

I'm pretty much struggling of how to figure out how much money I would get back from each if I sold and moved on after 2 years?