Shared ownership - what share to go for?

Bargain_Rzl

OK folks - I'd just like your thoughts on something ... (and sorry about the lack of paragraphs - technical problem) ... I have been offered the very nice shared ownership flat I viewed last week (woohoo!) ... The minimum share I can buy is 40% which, factored into my full budget sheet and based on the interest rate of my approval in principle (which would be fixed for 2 years), leaves me £50(ish) a month after all realistic outgoings ... If I went for 50%, which I would prefer to do if possible, it would leave me with £10 a month ... Either way, I still have slack in my budget as I could slash my travel costs if necessary (new flat is near my workplace so I could always ditch my travelcard) ... Just trying to weigh up the advantage of buying the extra 10%, which on the one hand would entail that bit extra of the flat being at risk of longer-term rising interest rates, falling prices and so on (plus the higher outgoings) ... but on the other hand, would mean that if prices do continue to rise, that extra 10% would be bought at today's price (if I buy extra shares of the property in the future they would be priced based on the value of the flat AT THE TIME) ... I should add that if I were to go for 40% instead of £50, I'd be using the extra cash each month to overpay the mortgage ... Anyway, just thought I'd ask which way you'd go ... I'm not looking for financial advice as such ... I'm pretty convinced that I'll be going down the 50% route ... but I would value some opinions on the subject ... I need to make the decision this week ... TIA ... Rzl

cattie

I would stongly advise you to go for the 40% share as money is pretty tight for you at the moment. When owning a property there are always unforseen expenses cropping up from time to time & you need a bit of a cash cushion for such times.

If you go the 40% route you can always increase your share at a later date, but if you go the 50% route & times get tough you can't staircase down to a lower percentage.

Believe you me, you never know what lays around the corner, so I would always advise never to extend your finances to the limit & risk the possibility of losing your home if some disaster or tragedy should ever strike.

Best of luck in your new home.

lynzpower

Id also go for 40% for a number of reasons
1) when you come to sell the proportion is smaller, thus easier to shift ( my thinking not sure if its right
2) the rent side will more as likely be less than the mortgage.

50pcm isnt a great deal of slack in your budget, but overpaying will reap rewards as you know Id say you are better off with a smaller share and ability to overpay. I think anyway

Bargain_Rzl

That's interesting - thanks ... I should add that by gettingt rid of my travelcard I could create about an extra £50 a month (flat is cycling/walking distance from work, but I'd keep an allowance for ad hoc travel) and am also expecting a payrise which I have not factored in AT ALL (as I never would until it was agreed and finalised) ... I've also been pretty generous with the rest of my budget ... Still undecided ... keep 'em coming