1st time buyers, looking at a SHARED ownership property.

MonsterST

Hello signed up here just now as me and my partner have huge headaches and are just looking for some advice.

We were renting for three years at aged 20, we moved back home at 23 to save for a house. It's been hard going backwards and a year later we currently have 15k between us.

We had planned to save a bit more but a property has popped up on the shared ownership scheme, granted we're being hasty as we are excited at the thoughts of being picked for it. It's perfect for us in a brilliant location, we're in Kent so prices are ridiculous.

£360k, 35% share (£126k)

Now again we might not even get picked, but we are hoping. However we work out our ages, expenses and just seem to be left with very little each month. £49k combined salaries, which isn't terrible (not fantastic I know).

£12600 deposit
£540 rent
£18 service charge

Any advice if you were in our shoes, do we go for this, do we stay put save some more and go for a full 100% mortgage, baring in mind that we can't afford anything anyways around here as most homes are upwards of £300k and without the shared ownership offering the low price we need to secure we seem stumped unless we stay at home for another 10 years, which we cannot do!!

Thanks for any advice, sorry if it makes little sense I am up late pulling my hair out and needed to vent some what!!

Kitten868

No one can tell you what you should do. But I would think of this way - would you be buying as expensive a house outright? Or would you buy something cheaper? Is there anything cheaper? We're buying 40 minutes away from our family as we can afford it but we can't afford close to our families. What compromises do you feel comfortable making. It comes down to financial or location.
I don't know what happens with buying the rest of the house or if you can so I don't know the longer term ramifications. I'm not buying one as rent and mortgage is too much for us plus you have to pay what they want to buy more of the house. X

Chris2015

I own a 75% share in a property and I am looking to sell after 10 years. I have recently discovered that I will have to pay into a sinking fund. This will be paid from the sale of the property and works out at about £10k, not happy to say the least. The housing association have effectively said 'tough' as it was in the lease. I don't remember the conveyancing solicitor discussing this and I will be challenging it. I'm not very hopeful though. Therefore I will now need to save this money in able to get a big enough deposit for my next property.
You will have to decide what is right for you but look at the lease and very carefully before you agree to anything. I would not recommend shared ownership and would advise others to try and go for a conventional full mortgage. However, it is easier said then done.
This is the first time I have ever posted on here so I'm not too sure on etiquette etc but if anybody has any suggestions for me regarding the sinking fund situation then it would be greatly appreciated, thanks.

MonsterST

Hmm. See I do think a conventional 100% mortgage is the smartest move, in money terms at least.

But places are so expensive at the moment for first time buyers we'd be able to just about afford a 280k property which there are not many around for that sort of price, at least not the areas we are looking to live in 30 minutes from work.

The shared ownership is giving us an opportunity to live in a fantastic area in a house that's valued at 360k (small for 360k but again the area we live in...).

I do worry about throwing away X amount each month in rent, ideally I'd like to staircase but have no idea how that actually works.

csgohan4

MonsterST wrote: »

Hmm. See I do think a conventional 100% mortgage is the smartest move, in money terms at least.

But places are so expensive at the moment for first time buyers we'd be able to just about afford a 280k property which there are not many around for that sort of price, at least not the areas we are looking to live in 30 minutes from work.

The shared ownership is giving us an opportunity to live in a fantastic area in a house that's valued at 360k (small for 360k but again the area we live in...).

I do worry about throwing away X amount each month in rent, ideally I'd like to staircase but have no idea how that actually works.

Your not just paying rent on the share yo don't own, but paying 100% of maintenance costs whether you own 50% or 75%.


If the costs of staircasing is quicker than your wage rises, your stuck and selling your share will be more difficult as it will be a lot less people able/willing to buy


Costs of buying a house is more than just 'it's cheaper than rent'

marksoton

Chris2015 wrote: »

I own a 75% share in a property and I am looking to sell after 10 years. I have recently discovered that I will have to pay into a sinking fund. This will be paid from the sale of the property and works out at about £10k, not happy to say the least. The housing association have effectively said 'tough' as it was in the lease. I don't remember the conveyancing solicitor discussing this and I will be challenging it. I'm not very hopeful though. Therefore I will now need to save this money in able to get a big enough deposit for my next property.
You will have to decide what is right for you but look at the lease and very carefully before you agree to anything. I would not recommend shared ownership and would advise others to try and go for a conventional full mortgage. However, it is easier said then done.
This is the first time I have ever posted on here so I'm not too sure on etiquette etc but if anybody has any suggestions for me regarding the sinking fund situation then it would be greatly appreciated, thanks.

Hate to say it but if it was in the lease i don't see how you can escape it.

MonsterST wrote: »

Hmm. See I do think a conventional 100% mortgage is the smartest move, in money terms at least.

But places are so expensive at the moment for first time buyers we'd be able to just about afford a 280k property which there are not many around for that sort of price, at least not the areas we are looking to live in 30 minutes from work.

The shared ownership is giving us an opportunity to live in a fantastic area in a house that's valued at 360k (small for 360k but again the area we live in...).

I do worry about throwing away X amount each month in rent, ideally I'd like to staircase but have no idea how that actually works.

You need to lower your expectations and compromise somewhere.

MonsterST

I don't think many people understand how hard it is at the moment. Lowering my expectations, they're pretty dam low considering every property is absurdly priced.

1 bedroom flats are 150k + around here, not sure how lowering my expectations is going to help me get onto the property ladder?

Edit - We are looking at a 2 bedroom house, one parking space and a small garden. We rented a flat for three years and I don't want to go into another flat if I'm honest ...


Also I am aware of the costs of owning a house, but we'd like to get onto the property ladder so we can stop living at home with our parents.

Just not sure which of the government "help to buy" schemes are the ones worth pursuing, again that's if you can even find houses that normal people can afford...

marksoton

MonsterST wrote: »

I don't think many people understand how hard it is at the moment. Lowering my expectations, they're pretty dam low considering every property is absurdly priced.

1 bedroom flats are 150k + around here, not sure how lowering my expectations is going to help me get onto the property ladder?

Edit - We are looking at a 2 bedroom house, one parking space and a small garden. We rented a flat for three years and I don't want to go into another flat if I'm honest ...

Then you need to adjust location. £360K for a first time buy is insane.

You are seriously trying to punch above your weight.

leanne12345

I understand how hard it is. We have just bought our first house an hour/50 miles away from where we used to live and work as we couldn't afford there. We felt that buying our own house was the most important thing so it's just what we had to do.
You need to manage your expectations a little.

Chris2015

I know, it does seem unfair as the lease document is at least 100 pages long and it isn't highlighted very clearly regarding the sinking fund. I agree though, I don't think there will be much I can do about it

MonsterST

I can't really relocate work, get London waiting so my wages would drop if I moved. Going to be a 30 mile commute there and back from this property we are looking at. We are actually moving closer to where my fiancee works as a nanny in a good area where she should her salary increase once she finds a new family.

I've done the calucalations and after all expenses, rent, food everything we're left with £700 a month between us. Not as much as we'd like but plan would to be really frugal for the first year and stick loads into savings for an emergency cash fund, then steadily put away X each month to hopefully allow us to do the stair climbing and buy more shares of the property.

I don't think for us ultimately it's about having loads of money 40 years from now, it's more about just living comfortably, in a small two bed house that we can call our own and just begin to live our life together again.

Is staircasing realistic, I don't quite get the ins and outs but I assume you take a bigger mortgage, pay less rent and more mortgage/month so you're paying the same regardless but owning more of the property?

If it was to prove to be a bad move, 5-10-15 years into it we could take whatever we've paid, fight through the moving process no matter how hard/long it takes then take that amount and use that for a deposit somewhere else if it came to that?