Shared Ownership - Advice please

BobSam

Hi,

My application with a housing association has been accepted for a Shared Ownership property. Now we're looking for mortgages. As my husband has a horrendous credit history, I'm looking fro a mortgage on my own.

My parents are paying off all my debts, and can give us a desposit up to 15%. The issue we seem to be having is my income, and I am failing on the affordibility. I only earn £14,400 pa. Obviously my husband pays for half of everything but no one can take this into consideration.

Any advice would be gratefully appreciated. We've tried Santander and Leeds BS. Santander said no. The Leeds was through a company called Metro Finance, but they said Leeds had issue with me being married but only one of us on the mortgage?

Thanks

carefullycautious

If you struggle with your finances now how on earth can you afford to pay back a mortgage and the rental on the shared ownership.

You only have to default on the rental part and you will loose your deposit and your home as the HA will have no hesitation in evicting you.

I know that for a few in high demand areas shared ownership can work but for many it becomes a misery.

Search the threads and read up on everything before committing to this

kingstreet

It would have been sensible to establish your mortgageability first!

On an income of £14,400, with shared ownership rent, assuming you have no other credit and no kids, you'll find your maximum mortgage is about £50k - £55k.

You haven't actually said how much you will pay for your share, nor given any other helpful information, so I'm pretty much unwilling to speculate further.

If a good whole market mortgage broker can't do this, you won't find anywhere, IMHO. I don't know Metro Finance and suspect they are local to you...?

gazfocus

I would also like to add that what Metro Finance have said about Leeds BS having an issue with you being married and the mortgage being in just your name...is absolute tosh!

I bought a shared ownership house a while back and it was just in my name. My wife had to sign a form to say she had no financial interest in the house but that's it.

BobSam

Hi, thanks for the responses so far,

carefullycautious, I have no issue with my finances, and have no issues with paying my debts or defaults on my credit file. My parents are paying them off because I have no chance of getting a mortgage with them. It's their way of trying to help us get onto the property ladder. My husbands financial issues are from before our relationship. We currently pay £500 pcm rent and have never had a problem with this, a mortgage plus rent to the HA will likely be less than this.

Kingstreet, the total value of the property is £152,500 and we're looking at a 25% share. We have 15% for a deposit. Any tips you could offer would be great. Metro Finance were recommended by the HA as someone experienced with SO, not sure where they are based. We are on Merseyside.

Gazfocus I was thinking the exact same thing, but not having previous experience I wasn't 100%. Someone else has suggested exactly what you said, so think in the meantime I'm going to speak to Leeds BS directly.

Basically I'm open to trying anything!

Thanks

kingstreet

If you have submitted a joint agreement in principle request to Leeds and they have declined it, they will then decline an agreement in principle, or full application from the sole credit worthy applicant.

The broker may be right, depending on what has gone before...

If you run your figures through the Leeds affordability calculator as follows;-

£14,400 income

£270.84 shared ownership rent

£38,125 purchase price

£32,406 mortgage (85%)

2 adults and 0 children resident in the property

Mortgage term 30 years

the affordable mortgage amount is £24,452.

The rent on the unowned share is killing you. If you have any credit commitments or children as I alluded to earlier, the amount will fall further...

carefullycautious

BobSam wrote: »

Hi, thanks for the responses so far,

carefullycautious, I have no issue with my finances, and have no issues with paying my debts or defaults on my credit file. My parents are paying them off because I have no chance of getting a mortgage with them. It's their way of trying to help us get onto the property ladder. My husbands financial issues are from before our relationship. We currently pay £500 pcm rent and have never had a problem with this, a mortgage plus rent to the HA will likely be less than this.

Kingstreet, the total value of the property is £152,500 and we're looking at a 25% share. We have 15% for a deposit. Any tips you could offer would be great. Metro Finance were recommended by the HA as someone experienced with SO, not sure where they are based. We are on Merseyside.

Gazfocus I was thinking the exact same thing, but not having previous experience I wasn't 100%. Someone else has suggested exactly what you said, so think in the meantime I'm going to speak to Leeds BS directly.

Basically I'm open to trying anything!

Thanks

But that's the issue you aren't paying your debts your parents are. What happens when they can no longer bail you out. Believe me you are going to seriously struggle, just be very careful about what you are getting yourself into.

katejo

kingstreet wrote: »

If you have submitted a joint agreement in principle request to Leeds and they have declined it, they will then decline an agreement in principle, or full application from the sole credit worthy applicant.

The broker may be right, depending on what has gone before...

If you run your figures through the Leeds affordability calculator as follows;-

£14,400 income

£270.84 shared ownership rent

£38,125 purchase price

£32,406 mortgage (85%)

2 adults and 0 children resident in the property

Mortgage term 30 years

the affordable mortgage amount is £24,452.

The rent on the unowned share is killing you. If you have any credit commitments or children as I alluded to earlier, the amount will fall further...

When I bought my first place, my salary was around 14K. I had a mortgage for 36K. That was perfectly manageable but I would not have been able to afford rent on an additional 30K or so.

kingstreet

In this case, the rent is on the other 75%, £118,187. At 2.75% that's £270.84 per month, plus the service charge and ground rent.

BobSam

kingstreet wrote: »

If you have submitted a joint agreement in principle request to Leeds and they have declined it, they will then decline an agreement in principle, or full application from the sole credit worthy applicant.

The broker may be right, depending on what has gone before...

If you run your figures through the Leeds affordability calculator as follows;-

£14,400 income

£270.84 shared ownership rent

£38,125 purchase price

£32,406 mortgage (85%)

2 adults and 0 children resident in the property

Mortgage term 30 years

the affordable mortgage amount is £24,452.

The rent on the unowned share is killing you. If you have any credit commitments or children as I alluded to earlier, the amount will fall further...

Hi Kingstreet, yes that's what we're finding it's the rent side that's screwing us. The rent is £262.11 and the service charge is £22.75 so you weren't far out. I've spoken to the Leeds directly now and they have said they can offer me around £29,500 leaving us about £3,00 short. Still the best we've offer we've had so far. May have to see if we can find that extra £3,000. Thanks for the advice.

BobSam

carefullycautious wrote: »

But that's the issue you aren't paying your debts your parents are. What happens when they can no longer bail you out. Believe me you are going to seriously struggle, just be very careful about what you are getting yourself into.

I can kind of see what you mean, in terms of treading carefully. My debits aren't a struggle now is what I'm saying, I manage to pay everything each month including my rent. My point is that with no debts and the mortgage & rent payments I'll actually be about £250-£300 a month off better than I am now. Not to mention the benefits of the property we are looking at such as lower car insurance, contents insurance, heating bills, shorter commute to work. These are all things that mean long term this will work out financially cheaper.

This is the first time my parents have ever "bailed me out" and we ar every fortunate that they have offered and are in the position to offer. From their point of view, they would rather help us now than leaving us money when they pass away. They want to see their kids settled and secure as possible and we're extremely lucky in that respect.