Past bad credit rating and buying through shared ownership!

scatz

Of late we have really been concerned that we will have no legacy to leave our children and will, ourselves, end up in social housing when old age catches up with us. Both are very scary prospects as I am sure you can appreciate. Any way, there is a new development of houses being built at the end of our road to include affordable accommodation.

Our past situation was that we were in debt to the tune of about £12k and eventually entered an IVA through the CCCS. We paid off all our debts in November 2009 because of an inheritance that the wife received! We haven't applied for credit since paying our debts off.

Our current situation is;

- that we are financially stable with disposable income at the end of every week/month.
- we have one credit card [the wives] which we do our weekly shop on and pay off as soon as we walk back through the door.
- we don't have saving per say but can save maybe a couple of grand in around three months

I suppose we am after some advice from people that may have been in a similar financial situation and that have either been successful or not in the shared ownership route. We see no other way in which we will ever be able to get a foot on the home owners ladder otherwise.

Lastly, we are not entirely sure what we should be doing to get the ball rolling! I have today emailed Orbit Homes [to register interest in the development in our area] who are the advertised people at the site entrance even though all web searches state that Moat Housing are the Home Buy agents for our area which confuses me slightly?? Do we need to contact both Orbit and Moat?? Do wee need to speak with the developers??

Any constructive input here would be appreciated

babychick

If it were me, I would save my disposable income for a couple of years and get the requisite 15% deposit that is necessary these days for a decent mortgage rate - and THEN look at buying somewhere.

You say that you have disposable income each month but that you don't have any savings - why not? I'm not being @rsey but if you've been considering your future, I would have thought you'd have been putting away into a little nest egg?

But then, this is only my opinion and what I would do - I'm sure others will have differing views. Good luck whatever you decide to do!

poppysarah

Get saving. When you've got 10% then consider buying.


The fact you could, but don't, currently save is worrying.

scatz

babychick wrote: »

If it were me, I would save my disposable income for a couple of years and get the requisite 15% deposit that is necessary these days for a decent mortgage rate - and THEN look at buying somewhere.

You say that you have disposable income each month but that you don't have any savings - why not? I'm not being @rsey but if you've been considering your future, I would have thought you'd have been putting away into a little nest egg?

But then, this is only my opinion and what I would do - I'm sure others will have differing views. Good luck whatever you decide to do!

Even with a 15% deposit, the most we could afford to buy in our area is a 2 bedroom flat due to the cost of housing in the area! South East is only 2nd to Greater London in the average property price game and even terraced housing is averaging £200k. Our earnings only allow for a mortgage of around £100k!!

Regarding the saving of our disposable income; I have only recently become aware of such schemes being open to not only current social housing tenants and key workers but also to families such as my own!

Disposable income on our part is that which can be spent on days out, a better quality of food etc. We have spent so many years robbing Peter to pay Paul that it has been nice to use that disposable income to have some of life's little luxuries. Obviously, now we are aware that there is light at the end of the tunnel in the form of affordable housing that we may be eligible for then obviously our disposable income will become savings but I fear because of our lateness in becoming aware of our possible eligibility and the rate at which these new houses in our area are being built is that we will miss the boat, so to speak

neas

Cant agree more... by its very nature extra income would amass up into a savings point, if you simply spend it then you dont have extra income.

Need to get 10% deposit at least... sorry its not what you want to hear but here are the facts from what you told us:

1. You got into debt before and only got out of it via an inheritance
2. You believe you could live a lifestyle you couldnt afford before and have been burned and saved by the inheritance (basically you spent the inheritance).
3. Now you believe you have more money coming in per month but in 2 years have not amassed a deposit for a house which you knew you would want to buy.

All these things are alarm bells ringing, withouit a deposit you will be forced onto a higher interest rate than normal (if you can get a mortgage). which again is financially stupid. i.e. having a 5% mortgage compared to 6% means you throwing thousands of pounds down drain in the initial years...

scatz

poppysarah wrote: »

Get saving. When you've got 10% then consider buying.


The fact you could, but don't, currently save is worrying.

Ditto to previous reply regarding saving a deposit for an outright purchase.

Ok, saying we don't have savings at all is maybe a small white lie. I put away £200-250 every month but this is always used to pay everything to do with the cars we run [insurance
, tax, MOT etc]. Even after paying all of those things there is money left aside for rainy days! Maybe £1k a year over and above the motoring payments! We have, unfortunately eradicated the previous years savings by having to pay vets fees for our dog who has got cancer and the cover we had for him changed the goal posts but that's another story.

I'd like to add, but still appreciate comments thus far, that I was after input specifically regarding shared ownership rather than being advised to save for a substantial deposit as mortgaging that way in our area is not an achievable goal

poppysarah

scatz wrote: »

I'd like to add, but still appreciate comments thus far, that I was after input specifically regarding shared ownership rather than being advised to save for a substantial deposit as mortgaging that way in our area is not an achievable goal

You've discovered why you should save money. For a rainy day.

When you want to get on the property ladder you have to also save.

Shared ownership schemes just prop up prices imo. (and if you can only afford say 50%, do you expect things to change for your childrem - will they only be able to afford 10%? Just say no to SO!)

Maybe your income and lifestyle isn't what you need to achieve home ownership.

This may be hard for you to come to terms with at the moment. But why not save up and see how you feel in two years time.

babychick

I 'think' I understand where you're coming from but as far as I'm aware (and I may most certainly be wrong) you still need a reasonable deposit for shared ownership properties? Even if it's only 5%, that's still 5k you don't have at present.

My best advice at this point would be to find out some of the finer details from the shared ownership scheme i.e. deposit requirements, payback terms/rent payable on the remainder and then come back here for some more in-depth advice.

Hope this helps a little.

BitterAndTwisted

For someone in your situation the very last thing you should do is consider shared ownership as the panacea to not being able to afford to buy. I think Neas has described your situation very clearly: you were in debt and the only reason you aren't now is because of a windfall and not because of your own efforts. Despite not having any debts to pay off you haven't managed to amass any decent saving to put by for a deposit and instead have reached for justification to explain why you haven't but the sorts of expenses are ones which could creep up on anyone.

I really, really don't think you are currently in a position to buy anything yet and in my opinion shared ownership/shared equity are not a ssensible way to buy propery. Often you have all of the disadvantages of ownership with few, if any, of the advantages. You only need to have a trawl of this forum to have a window on how problematic they are once people need or want to sell up and move.

scatz

@ Neas & Bitterandtwisted, I feel your comments regarding us paying off our debts are unfair and unjustified. We made every effort to pay off our debts prior to the 'windfall' that we had received! We scrimped every last penny to ensure we were paying the absolute maximum we could afford at the time! I am not one to shirk my responsibilities and the need to have the IVA was down to unforeseen circumstances not through bad financial planning etc. The inheritance was a chance for us to be able to pay off those debts which is what we did!

Now, I seem to be being told that I'm some sort of fool for wanting to head down the route of shared ownership. It's an option for us and I thought the forum was for advice not slating or berating!!

If need be, I could quite easily sell my car and have £5k towards a deposit! We could quite easily raise a couple more £k with our income if we need to.....now we know that we are possibly eligible for this type of purchasing scheme!

The option of buying a home outright now or even within the next couple of years based on house prices here in the South East is not and never has been a viable option, hence why I have asked for advice from people who have been in the same situation regarding this particular option to buy!! We have saved money but that has been spent on unforeseen circumstances, it's not like we haven't tried! Should I be saving for saving and saving for unforeseen circumstances as well?? We currently put aside between £200 and £250 each month FYI!! I have found a way for us to possibly be able to get to where we want to and will now try everything in my power to get us there (hence the OP) Am I being told that because we cannot afford the extortionate house prices in our area that we are not worthy of ever being able to get a foothold, I thought that's why these schemes were introduced, for families such as ours?

I have done my sums with our income based on the prices of the houses that are being developed and can see even if we spend as we spend now then we will be in a position to pay a mortgage of up to 60% of the property price and the rent and service charges and still be financially secure, even with a 5% increase in mortgage rates! We wouldn't, however, be able to get a mortgage for the full amount of the very same house! My mother bought this way and has moved quite considerably up the ladder!

Unless house prices crash we will never be able to afford to purchase through the normal method on the open market and no deposit is going to change this.....fact! The only option we have of buying is through one of these schemes which many have done and I am simply asking for advice from people who have been in the same situation.

I don't feel why I need to justify why we haven't saved towards a deposit but haven't because we never knew of this option and know that outright purchase is and never will be viable. The development near to us only has a certain amount of houses and is a god send because of it's proximity to the children's schools, our current address and to those that we rely on for school runs etc. If we knew of this development and of our possible eligibility for this type of purchasing scheme then we would have been saving toward a deposit for such a purchase!

Jeez, wish I had never asked!

BitterAndTwisted

I think you are taking other people's opinions here much too personally. We don't know you or anything about your circumstances other than what you have chosen to disclose.

Presumably you posted on here to garner other people's opinions and I think that's exactly what you've got. That they don't necessarily agree with your own is unfortunate but you can choose to take them on board or not, that is your choice. I doubt anyone on here has offered an opinion just to get into an disagreement or engage in any personal attacks.

My own opinion, accept it or not as you wish, is that you are absolutely not in a position to get into a very serious financial obligation and even if you were shared-ownership or shared-equity would most definitely not be the way to go about it.