Right, going into shared equity from full ownership - am I mad?

Eels100

I bought this house on a 98% mortgage 5 years ago. Haven't seen the IFA who "helped" me since, but needless to say I am older and wiser. And he's better off.

I've since had two kids and hence our financial situation has changed considerably.

We've gone from a combined income of £40k to a single income of £17.5k (plus CTC and CB), possibly added to by some part time work but nothing set in stone yet. We're keeping up with the mortgage on an IO basis, but that's no good long term.

We have no savings and a car which could die any day, If it dies, we can kiss goodbye to the £17.5k we can currently bring in, because we can't afford to replace it.

So we need to DO something pronto or we're going to be in a big mess.

If we sell this house (big "if" in the current market but we can price it competitively if we have to), we could probably pocket around £10k after fees are paid. We would be considered for a shared equity project where we'd take out a mortgage of about £67k and pay rent on the rest of the property - this place would cut our fuel bill by around £170 a month and is the same size as where we are now. Our monthly outgoings would be reduced so we could hopefully afford to build our savings back up a bit from there and at least stay on the bloody property ladder.

Is this a wise move, do we think? We could do nothing but I suspect, given childcare costs etc, we could be heading for a fall in that case. We have zero financial cushion and although other than a £1100 overdraft and a couple of hundred on credit cards we're not in massive debt, I can see that could easily change if we're not careful.

I'd really appreciate any thoughts on this. I have no idea where to get objective advice on this sort of thing and I need to address it before it becomes a disaster.

Apologies but this post is C&Ped from another forum, but I got lots of sage advice from you guys when I had problems before and I'd really appreciate your insights.

Henry_P_Chester

Why not rent for a few years while you save to buy at a later date? Being "on the bloody ladder" hasn't done you any favours so far and buying a shared ownership youre tieing yourself to one place and are not as mobile should other employment opportunities arise. Also shared ownership houses are very difficult to sell.

Eels100

Hmmm, yes ... I can sort of see the logic if rent was considerably cheaper than a mortgage but round here that simply isn't the case. Plus, with kids we really need a garden so renting a dirt cheap flat in the short term so we can save isn't ideal really - or, not worth a £50/month saving to me anyway. I do see what you mean though - the immobility from buying this place is a PITA when we have no savings. I can see why my boss was so delighted that I was buying a house!

Why are shared ownership houses hard to sell?

brit1234

Eels100 wrote: »

Why are shared ownership houses hard to sell?

1, Extra conditions and restrictions employed by the housing association.

2, Very few lenders prepared to give mortgages on them, I believe 2 possibly 3. Fallen drastically over the years.

3, Deeply unpopular scheme due to all the restrictions, overpriced and all the cost (mortgage, rent, service charge before other utility bills) making it very costly for a very small share.

4, 100% costs for things going despite owning a fraction of the property.

5, Not actually owning any of the property in the eyes of the law despite having a mortgage unlike other properties.

freyuk

Service charges raise every year to the point of being ridiculous and overall the properties are overpriced and not finished to an acceptable standard.

zappahey

Eels100 wrote: »

Plus, with kids we really need a garden

No, you don't. You need somewhere you can afford, maybe within striking distance of a bit of green space.

Eels100

Wow, OK lots to think about.

What I mean about the garden is that I'd rather have £50 a month less to save and have a garden than lose the outside space and save more - I can see that it sounds spoilt but I'm confident we could afford somewhere with room for them to be out and at the end of the day they'll only be little for a few short years - I'm not thirty yet so I have a long time with earning power ahead of me, it's just not doable just now while they're small.

I hadn't realised there were so many strings attached to the shared equity scheme. This is in Scotland if that makes a difference? Need to be reading a lot of small print before going down that road obviously.

zoesmummy_2006

Dont recommend shared ownership from personal experience. Bought one on half share with now ex, was expensive for size in.comparison but that was all mortgage we could get. We were offered chance to rent a lovely house from family friends but needed to sell. House was in area we wanted to be in and cheaper than mortgage for bigger house. Unfortunately we couldnt sell ours despite having seriously modernised it from the lil old ladies house we moved into. Fast forward 2 yrs, hubby walks out and stops paying mortgage, house days from repossession, one sale already fallen thru.at this point! Fortunately we got another buyer but its left me in debt! Wish we'd never bought the place.

BitterAndTwisted

Please do not consider shared-ownership! It's a great deal for the mobsters selling but no bliddy good for anyone who ever dreams of selling at a later date.

If you can't increase your income now by the time your kids are of school age your OH might be able to work more hours and then you could go onto a repayment mortgage. I'd rather sleep on a mate's floor for the foreseeable than "buy" a shared-ownership scam property.

zzzLazyDaisy

Okay, shared equity isn't popular on these forums, so here is a viewpoint from the other side...

My cousin lives in Surrey. No way no how could she afford a mortgage on her teachers salary after her marriage ended, with two children to look after. She rented for a couple of years with the help of HB. When she got her share of the matrimonial home she bought a small 3 bed SO terrace with a garden on an IO mortgage, plus rent and maintenance. her monthly payment is a lot less than her private rent was, and importantly she can't be moved on at two months' notice, which is what happened when she was renting.

When her children no longer need the home, she intends to sell up, release the equity, and rent somewhere is a cheaper part of the country (we are northerners, so we know what can be got for a fairly cheap rent elsewhere).

This means she can live, give her children a decent quality of life and some stability. You pays your money and you takes your choice, but sometimes life circumstances force you into choices that others might not choose to make.

Good luck, whatever you decide to do

Daisy

dmg24

Whilst I would not consider most of the newer SO/ SE schemes, some of the original ones do still offer excellent value. Also, some schemes have an index linked cap on service charges. For me, SO got me a house in an area that I would not have been able to afford otherwise. I have now bought outright, but if I could find a scheme offering the same terms I would go for it again.