Shared ownership - will we have enough to live on?

Sosa

Hi Everyone,

This is the first time I've posted here, just after some objective advice really.

Ok, the situation is this. [FONT=&quot]Me, my partner and our 9 month old [/FONT]are currently living in a crappy 1 bed flat, I'm very unhappy here as its falling apart, cramped and I really want our son to grow up ina nice home environment We are on the council housing list but as we both work we are not a high priority and the average waiting time is 3 years!

Anyway I went to see a shared ownership development of new flats yesterday and they were sooo lovely. If we went for it we would own 25% of the flat and pay a mortgage and we would pay rent on the remaining 75%. My parents have offered to help us out with the deposit and fees etc. OH is worried that we might be over stretching ourselves finanically and thinks it could put too much strain on our relationship, he thinks we should wait but said as its my parents money and me covering most of the costs the decsion is down to me. Either way it looks like one of us will be unhappy with whatever we do - argh!
I've done a little budget plan thing below - do you think it looks like we would be taking on too much?


Total Minimum Monthly Income (after tax) £1,935

Potential Monthly Expenditure
Rent & Mortgage £850
Council Tax £95
Contents Ins. £20
Phones £50
Broadband £10
Travel £120
Utility Bills (est) £150
Shopping £450
Total £1745


So that leaves about £200 left over each month - what do you think, is that too tough?

Bobby1982

Hi, Im no expert, but I think as long as you both keep budgeting in mind and make sure you stick to whats set out, maybe putting a little of whats left aside for emergencies. Its great of your parents to assist and if it gives you a nice home for you and your little one I think I would personally go for it.

Yes it doesnt give you much left over, but as long as you keep budgetting and maybe work out what you will need for the new place if anything, and maybe get second hand furniture etc, theres no reason why you shouldnt be able to keep to it.

Good luck, hope it works out for you x

jonesMUFCforever

What happens if there is another property boom?
Will you have to pay 75% of the inflated new valuation to purchase the whole flat?
What happens if you extend the family and this flat is too small - how easy will it be to sell??

Don't jump in is my advice.

LeeSouthEast

I'd look for a nicer rental and keep it simple, personally. Shared ownership is not for everyone, and I'd want a bigger surplus than you currently have available on your figures. (You also need to budget for the unbudgetable ... so take £50 off your available surplus).

With a mostly Tory government, I suspect we will see interest rates rise significantly in an effort to undermine the real value of the national debt. Is your mortgage figured on a 3-5% current fix average? What will you do when it hits 8%? 10%? 15%?

I don't mean to be negative. I know what it is like to fall in love with a place and to hell with the consequences! But take an objective step back and please don't rush into this. It's easy to get into, and very very difficult to get out of.

getmore4less

Sosa wrote: »

Hi Everyone,

This is the first time I've posted here, just after some objective advice really.
.......
he thinks we should wait but said as its my parents money and me covering most of the costs the decsion is down to me.
..........
Total Minimum Monthly Income (after tax) £1,935

Potential Monthly Expenditure
Rent & Mortgage £850
Council Tax £95
Contents Ins. £20
Phones £50
Broadband £10
Travel £120
Utility Bills (est) £150
Shopping £450
Total £1745


So that leaves about £200 left over each month - what do you think, is that too tough?

you need relationship advice

Whats does the current rental budget looks like the above in isolation is useless

£450 shopping for 3 is very high

hippey

Its also worth checking how the rent will increase - Will it be tied to RPI / CPI or will it be a 'market rent' ? Ask the sellers about rent rises on previous developments.

Also service charges can be a common issue, some flats can have very high service charges which will have to be paid on top of any rent payable. Either in a lump sum every year or per month. Read the lease carefully and do get your solicitor to confirm what will be payable and when.

But you are doing the right thing by checking your budgets before jumping in.

Sosa

Thanks for your responses. Yes I know there are some risks involved with property prices and intrest rates rising, although I know our income will increase next year as my partner will be working more, at the moment he will be taking on the childcare once I go back to work and working part-time. The thing that makes me want to go for it is that to just rent a property of that standard privately would be at least 950 a month anyway, doing shared ownership makes me feel I'm not just throwing that money away that I am actually getting somewhere.

The service charge and everything is included in the 850 so that won't be an added suprise. I also think that I can work on getting the 450 down for the shopping, however that does include baby essentials which really do add up.

The housing association make us go for a financial interview before offering us the chance to buy, I'm not sure how strict they are but I guess they won't let you do it if they really think you will struggle.

Bloomberg

Sosa wrote: »

Hi Everyone,

This is the first time I've posted here, just after some objective advice really.

Ok, the situation is this. [FONT=&quot]Me, my partner and our 9 month old [/FONT]are currently living in a crappy 1 bed flat, I'm very unhappy here as its falling apart, cramped and I really want our son to grow up ina nice home environment We are on the council housing list but as we both work we are not a high priority and the average waiting time is 3 years!

Anyway I went to see a shared ownership development of new flats yesterday and they were sooo lovely. If we went for it we would own 25% of the flat and pay a mortgage and we would pay rent on the remaining 75%. My parents have offered to help us out with the deposit and fees etc. OH is worried that we might be over stretching ourselves finanically and thinks it could put too much strain on our relationship, he thinks we should wait but said as its my parents money and me covering most of the costs the decsion is down to me. Either way it looks like one of us will be unhappy with whatever we do - argh!
I've done a little budget plan thing below - do you think it looks like we would be taking on too much?


Total Minimum Monthly Income (after tax) £1,935

Potential Monthly Expenditure
Rent & Mortgage £850
Council Tax £95
Contents Ins. £20
Phones £50
Broadband £10
Travel £120
Utility Bills (est) £150
Shopping £450
Total £1745


So that leaves about £200 left over each month - what do you think, is that too tough?

It will be quite tough but by no means insurmountable. My only concern would be the fact that interest rates are going to rise and they could go quiet high depending what happens gloabally as well as domestically, as far as I can see this has not been factored into the equation.

House prices are not going to shoot up, There are currently two hundred thousand households in the UK with mortgage arrears, last year forty six thousand houses were repossesed. The forecast was that seventy five thousand would be repossesed but the prolonged low interest rates were the saving grace.

My advice to you would be to rent a cheap place and start saving as much as possible. My friend's son was in a similar situation, in the end they moved into a cheap flat £420 pcm and they are now saving well over one hundred pounds a week. Please do not fall into the trap of thinking that if you do not own your house you have failed. Take it from me, there are many people who have nice big houses and fancy cars but when you balance their debts against the assets they are seriously in the red. If money becomes tight then the relationship will be strained. I wish you all the best whatever you decide.

Bloomberg

LeeSouthEast wrote: »

I'd look for a nicer rental and keep it simple, personally. Shared ownership is not for everyone, and I'd want a bigger surplus than you currently have available on your figures. (You also need to budget for the unbudgetable ... so take £50 off your available surplus).

With a mostly Tory government, I suspect we will see interest rates rise significantly in an effort to undermine the real value of the national debt. Is your mortgage figured on a 3-5% current fix average? What will you do when it hits 8%? 10%? 15%?

I don't mean to be negative. I know what it is like to fall in love with a place and to hell with the consequences! But take an objective step back and please don't rush into this. It's easy to get into, and very very difficult to get out of.

What great advice my friend.:T

gabyjane

Hi we are a family of 3 and have a S/O house and you sound just like i did when we bought ours so i will come on again later and let you know my opinion!!

CLAPTON

presumably your current expenses are similar to the new ones except for the difference between your current rent and the 850 for the new place....how much is that? ... are you currently saving that?