We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Bad credit, shared ownership!

THIS IS MY FIRST POST, SO SORRY ABOUT THE LENGTH. I HAVE SEEN NEGATIVE COMMENTS, ON SHARED OWNERSHIPS, WHICH I DON'T NEED TO HEAR... ALL I NEED IS ADVICE!

I am looking to purchase a shared ownership property. The value is £18k, for a 25% share, for which I would need a £15-16k mortgage. I am due to start a new job, at BT, were my basic salary is £18k. This is before tax, with another 10% available in bonuses. After 9 months, my basic wage will rise to £20k. Again, this is before tax, with another 10% available in bonuses.

I do have adverse credit, with debts of around £1500, which are being paid off. The defaults are phone bills, a catalogue and with Virgin Media. A phone bill was ran up by a family member, as they were out of work and needed to use a phone to search for self-employed positions. They have promised to pay this back, as soon as they can. The catalogue was a similar situation, which I have decided to start paying back myself. After finding out my girlfriend was pregnant, I was given the opportunity to move back home, but sadly she miscarried. I was in the middle of cancelling my Virgin Media, but due to the miscarriage and losing my job, I forgot all about it. I am about to set up a payment plan for this. The last phone bill wasn't paid, due to EE demanding £100 for internet charges, even though I had an internet lock. The agreed I had the lock and couldn't see what the charges were for, but still demanded it. I didn't have the £100 and had to leave the bill.

My idea is, if I can get a mortgage on the shared ownership, my monthly bill will be up to £150 cheaper than the average rent prices. The rent, for the other 75% is only £130, so with a mortgage of £200, I will be saving £100-150 on the average local rent. This will allow me to pay my debts off, within the next year, given I have just started a new permanent position. So, I would be able to increase my credit rating, whilst increasing it by having a mortgage.

I know that, due to my circumstances, I am all but certain to end up with negative equity. I have received quotes of a repayment of £25k, for the £15k mortgage. The property will never be worth this. But, that is only a loss of £10k, over say 15 years. Over that 15 years, I would also pay £23.4k in the 75% rental fees. So, an overall loss or rent would be £33k, over 15 years. This equals out to £2.2k a year, which is far below the average rent of £5.4k. Also, at the end of the mortgage, I would have the £18k share, which I could sell or sit on. This £18k could drop, but my idea is to modernise the property, so the value doesn't move much.

So, my point is, has anyone ever secured a shared ownership mortgage with bad credit? I know I will lose money in the property, but it will be less than what I would if I rented. If I rent, I will only be able to repay the minimum on my defaults.

Comments

  • csgohan4
    csgohan4 Posts: 10,600 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    edited 2 March 2016 at 7:12PM
    Search for shared Ownership on this forum and you will see the cons of these scheme


    e.g:
    https://forums.moneysavingexpert.com/discussion/5416679


    Your gains are minimal compared to owning a home and maintaining it. There's no LL to cry to when your need a boiler replaced or windows replaced e.t.c
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 347.1K Banking & Borrowing
  • 251.6K Reduce Debt & Boost Income
  • 451.7K Spending & Discounts
  • 239.3K Work, Benefits & Business
  • 615.1K Mortgages, Homes & Bills
  • 175K Life & Family
  • 252.6K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.