Shared Ownership - Large deposit - Tiny Mortgage

jmhock

I have a very large 120k deposit but the best mortgage i can get is around 60K due to my income. Having been unable to find any suitable properties to buy outright i'm turning my attention back to shared ownership.

So with my deposit it appears i can buy most minimum required shares from the outset. However speaking to a few housing agencies one or two said i also need a mortgage. Is this true?
if i have to get a mortgage then my monthly outgoings will get pretty tight with the Rent+ServiceFee+Mortgage. With the deposit i have i can reduce the Rent+ServiceFee to around the same as a Mortgage (£350/m)

i doubt i can fiddle it and just get a cheap 5K mortgage as it seems the buying process is heavily reviewed financially as i also read somewhere "i have to purchase the biggest share i could afford". However this statement is a big vague.

So maybe i could just get a mortgage but then quickly pay it off with my deposit. This would waste some money but at least i could still afford a place.

Could someone help clarify this a little for me?

BitterAndTwisted

Turn you attention away from shared-ownership!

With £120k in cash plus access to a £60k mortgage I refuse to believe that you can't find a property to buy 100% of.

jmhock

Can anyone else be a little more helpful?

bitsandpieces

The rules will vary from one scheme to another, so you'll have to check with the schemes you're considering. The value for money presented by rent/service charge on different schemes also varies a lot - so see what looks like a best deal near you.

I've previously owned a shared ownership place myself, but since then the market has changed quite a bit - I'd be much more cautious about buying one nowadays. Especially if you end up paying a premium for a newbuild property + a premium for SO + losing some money by taking an unneeded mortage, this does add up to quite a lot. I'm hoping to be able to buy again soon, and won't be looking at SO. Are you in an expensive area, where there's nothing on for £180ish?

Concerns about value for money and selling on SO properties may be less of an issue for some (if you're planning on spending the rest of your life there, you may not especially care about resale!) but I'd proceed cautiously.

mrginge

Probably not if that's your response.

ViolaLass

jmhock wrote: »

So maybe i could just get a mortgage but then quickly pay it off with my deposit. This would waste some money but at least i could still afford a place.

Could someone help clarify this a little for me?

You seriously can't afford a place for £180k?

jmhock

Thank's Bits and Pieces. To everyone else i work around Shoreditch and i need a 2 bed. Most places around here are cash only but these preowned shared ownership deals seem good value. I'm not interested in New Builds because of the premium but judging by mouseprice the preowned ones are going up in value.
I've been to some of these preowned are some are really nice with a good build quality and decor, some cheap builds that won't last 20 years but overall most are better quality that what i can buy outright.

To me i don't really see a property as an investment but more a place to live happily. I'm prudent but happiness comes first.

xylophone

i work around Shoreditch

Do you have to live in Shoreditch? Have you looked outside the area?

jmhock

Well nothing is ever set in stone with me but some a lot of days i find myself travelling into the area twice a day so i need to be a lot more local but really i need to cut down my commuting to 20mins each way.

bitsandpieces

jmhock wrote: »

Well nothing is ever set in stone with me but some a lot of days i find myself travelling into the area twice a day so i need to be a lot more local but really i need to cut down my commuting to 20mins each way.

If you're fit and likely to remain so, you could look for places within 4 or 5 miles bike ride of Shoreditch? Doable in 20mins, and there may be cheaper/quieter options than there are in Shoreditch. Of course, some people really want to be right in the centre of things - if so, you may be set on a place in Shoreditch itself - but I'd rather be slightly away from a busy area like this and travel in.

As far as SO places in Shoreditch prices rising in Shoreditch - haven't prices been booming there? It may be that *everything* there's rising, so I wouldn't assume that this means a SO place will be a good investment (they may be harder to sell than 100% owned places). Past performance doesn't necessarily indicate future performance - I really hope that house prices won't keep rising in London!