Shared ownership mortgages

ParrotLady_2

Hi all,

Wondering if any of you could help with advice....

I've been priced out of my current flat in East London thanks to the Olympics and my landlord being very greedy, and I'm trying to get onto the property ladder with a shared ownership scheme.

My problem is, I work freelance on short term contracts (but not fulle self-employed), and although I can prove I've paid rent every month for the last 6 years of my tenancy, somehow I doubt that'll be enough. I also think I have bad credit due to a couple of late payments in the last year, nothing major like CCJs, but major enough that I'm worried about it.

I earn £40k a year, have enough for legal fees and a deposit, I can afford the outgoings, and my parents have offered to act as guarantors, but I've heard you can't use guarantors with shared ownership? I guess I'm just wondering if I stand a hope in hell of getting a mortgage! Anyone else out there in a similar position or who can offer advice? I have to move out in a month and I'm starting to panic about what to do next...

Your help is most welcome, many thanks.

PL x

gazfocus

I don't know about getting a mortgage as a freelancer but presumably you've been good and done tax returns with HMRC? If so, there are lenders that will take these as proof of income.

In my experience, a good Independant Mortgage Advisor (or Independant Financial Advisor) is worth their weight in gold and would definately be the best route to go down.

ParrotLady_2

Hi Gazfocus,

Many thanks for your reply.

To make matters tricker, I'm not fully-fledged freelance...most of my jobs are fixed-term contracts which are PAYE, but between contracts I do some freelance research work where I have to complete a tax return, but that only earns me £1-2k a year so not really much help in mortgage terms.

I think given that my circumstances are just so weird, I'm going to have to speak to a specialist advisor about this...

Thanks, PL x

gazfocus

That might be even more difficult because lenders will want to see a stable working background whereas it sounds like you've been in and out of jobs alot (from a lenders prospective).

brit1234

Parrotlady avoid shared ownership at all costs it is a scam. On a plus note property prices in London fell 1.8% (lad Reg) and I predict East London will have the biggest falls after the Olympics with the hype. Just keep saving that deposit to take advantage.

gazfocus

Brit1234, I'm sure I'm not the only one that's absolutely sick and tired of you droaning on about shared ownership being a scam. It's beyond BORING!!!

poppy10_2

gazfocus wrote: »

Brit1234, I'm sure I'm not the only one that's absolutely sick and tired of you droaning on about shared ownership being a scam. It's beyond BORING!!!

It's true though. I for one don't mind being boring if it means saving even one person from falling for this scam.

Mamonaku

ParrotLady wrote: »

Hi all,

Wondering if any of you could help with advice....

I've been priced out of my current flat in East London thanks to the Olympics and my landlord being very greedy, and I'm trying to get onto the property ladder with a shared ownership scheme.

My problem is, I work freelance on short term contracts (but not fulle self-employed), and although I can prove I've paid rent every month for the last 6 years of my tenancy, somehow I doubt that'll be enough. I also think I have bad credit due to a couple of late payments in the last year, nothing major like CCJs, but major enough that I'm worried about it.

I earn £40k a year, have enough for legal fees and a deposit, I can afford the outgoings, and my parents have offered to act as guarantors, but I've heard you can't use guarantors with shared ownership? I guess I'm just wondering if I stand a hope in hell of getting a mortgage! Anyone else out there in a similar position or who can offer advice? I have to move out in a month and I'm starting to panic about what to do next...

Your help is most welcome, many thanks.

PL x

I could almost have written your email myself. East London - tick. Landlord hiking the rent - tick. Looking for shared ownership - tick. Mixture of self employment and PAYE - tick.

We have been accepted to purchase a shared ownership property by a housing association, and have been told by a mortgage broker that specialises in shared ownership that we will get a mortgage.
The key thing is that you need to prove your earnings. Your PAYE and self employment earnings are all recorded on your self assessment, and you can back this info up with invoices and payslips.

You will need to have been registered as self employed for a minimum of 3 years. Your earnings will be averaged over the previous two financial years when applying for the mortgage, so if you earned £30000 one year and £40000 the next, your average would be £35000.

I was also told you can't use guarantors with shared ownership, by the mortgage broker. You can't accept a loan from a parent for a deposit either (as this implies you have to pay it back). You can accept a gift towards a deposit though.

I'm not sure how much late payments will affect you. I suggest you talk it through with a mortgage advisor who specialises in shared ownership. You could phone a housing association (Metropolitan, Family Mosaic, Southern Housing, Notting Hill HA etc) and ask for their suggested list of brokers.

I understand what people are saying about shared ownership being a scam. I would love it if property prices in my area (also East London) corrected enough for us to buy outright but it hasn't happened in the last 6 years, and with demand high (trendy and popular with young professionals) I don't think it will happen soon in my particular postcode. It's a risk we've decided to take. If property prices crash in the next few years, we can buy the other portion of the property at a reduced price. We are losing equity in rent anyway at the moment. Also shared ownership frees us from greedy landlords, and gives us somewhere to settle in the longer term. We are playing a long term game. I wouldn't buy if we thought we might need to sell in the next two years though. I think the advice is always to buy somewhere that you are prepared to live in for the long term if property prices do dip.

I completely understand the arguments that shared ownership helps inflate the property market, and the market needs to correct, but we need somewhere to live and are priced out of the rental market.

The_J

The problem with people calling shared ownership a scam is that they look stupid. It's not a "scam". It's certainly not the magic bullet for home ownership and its a decision you need to go into with your eyes wide open, like you always should for the biggest purchase of your life.

Use less emotive language and proper reasoning and you might get people to understand you better. Harp on about silver prices, house price crashes (London is actually up for the year, but by such a margin that it can be considered irrelevant). You cannot dismiss the index one month (when it increases) and value it the next (when it decreases). You look like a crackpot.

Of course, you actually are !!!!!!! mental so I don't know why I'm giving you this advice.

jimsmillions

brit1234 wrote: »

Parrotlady avoid shared ownership at all costs it is a scam. On a plus note property prices in London fell 1.8% (lad Reg) and I predict East London will have the biggest falls after the Olympics with the hype. Just keep saving that deposit to take advantage.

poppy10 wrote: »

It's true though. I for one don't mind being boring if it means saving even one person from falling for this scam.

Bought house in 2000 on a scheme called Homebuy. We picked a house ourselves we took out three quarters mortgage and the housing association bought the other quarter. If I sell obviously I pay them a quarter back of the current market value. A great investment for them at current prices which is no doubt why they did it.

Please point out where I am being scammed? From the day I moved in have not had so much as a letter from them.

gazfocus

As has been said many times...

Buy 50% of a shared ownership house for £75k, total house value £150K
House value drops to £120k after purchase
Buyers 50% share now worth £60k
Buyer loses £15k in value

Buy 100% of a non-shared ownership house for £150k, total house value £150K
House value drops to £120k after purchase
Buyers 100% share now worth £120k
Buyer loses £30k in value

I really fail to see where the 'scamming' is happening!