Shared ownership and staircasing

AliceBanned

I am looking at a shared ownership property, 70% share for £113k in an area I love. I like the flat but it needs a tiny bit of work - new carpets and the kitchen could do with updating. The flat is 15 years old and has the original kitchen. Otherwise it's fine.

I have £7.5k deposit so far, but I've been told by one mortgage broker re a previous SO property I looked into, that I would need 15% deposit for SO, and 10% for non SO ie 100% purchase.

I was meant to meet the estate agent's broker last week but cancelled as I was unsure whether i would go ahead. I need to go for a second viewing in any case. Would it be worth me going through the finances with him/another broker first? I really would want to go up to the full purchase (£160k approx) within a couple of years. Current salary £28.5k so not sure whether this would be possible. I have credit card debts and a loan as below.

I'm not in a huge rush as the property has been on the market for about 9 months. I suspect because it is SO and there are so many ties with this. I couldn't afford in the area (Harpenden, Herts) unless I go for something like this, and few SO properties come up. My salary has been increasing 4% per year for the past few years. I'd be happy to keep saving and wait another 6 months or more, as I am saving around £600-700 per month at present. But even then i am unlikely to get a mortgage above £120 so it seems this may be my best way forward. I know lots of people don't like SO and I have my doubts; just that this is a large share and I wonder whether I could get up to 100% ownership..just hard for me to think through as i know it depends on lenders etc, but what is the likelihood? Thanks

kingstreet

Why did he/you think you would need 15% deposit for shared ownership? We do a lot of this and the Leeds BS does 95% and others 90% of the share.

You have to remember, affordability will include the cost of the rent and service charges on top of your personal commitments.

Use this;-

https://online.leedsbuildingsociety.co.uk/public/mortgages/quick_enquiry.do

but make sure you put the rent and service charges in the "personal monthly commitments and outgoings box."

AliceBanned

Thanks for quick response. Mmm not sure but I'm not using him any more - decided to look elsewhere. I actually find it quite hard to get help with this - I would think people would be touting for business but often they don't even get back to me.

The other SO property had a total rent and service charge of £500 and the mortgage would have been £360, so perhaps this was why they asked for 15%. But the share with that one was only £62k. Maybe I should have shopped around, but it's hard as i don't want to make loads of applications..

AliceBanned

I could borrow between £116k-122k according to that calculator.

I have one "arrangement to pay" (not a default) which will be on my file for about another year. Just a credit card arrangement which I paid off slowly and had the interest frozen, over 5 years ago. That is the only negative apart from the debts.

So if I were to go ahead, presume it would be several years before I could staircase because I would have to pay off the equivalent of the amount I would want to borrow? If that makes sense..thanks.

AliceBanned

Actually it's £102-109k I could borrow - forgot to add in rent and service charge. Thanks, very helpful as I now have an idea of how much I am likely to be able to borrow. Interesting as it means that when/if I pay off my debts I can borrow quite a bit more..(obviously but it gives me actual figures to base my decisions on:cool:).

kingstreet

I suggest you find the HCA Homebuy Agent for your area and contact them. Ask them for their list of approved mortgage brokers and talk to one of them.

Many general advisers don't understand shared ownership and don't have access to the SO affordability calculator which determines the share you will be allowed to purchase.

AliceBanned

Great, many thanks! The property is now being marketed via the estate agent, as it did not sell when being marketed by the housing assoc (I think they allow six months, then it goes onto the open market). The estate agent claims to have access to the lenders etc and the housing assoc does not want to get involved. But I should still be able to go via the Homebuy agent.

kingstreet

If it's a well-known firm of national estate agents, they have a small panel of lenders which does not include Leeds BS. You would then be told only about lenders on the panel which accept SO business and their maximum loan.

AliceBanned

Ok thanks, yes it is a well known national firm.

I have the homebuy agents from the Lea Valley Homes website so will try these. Thanks.