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Saving to buy a house - is this the answer???
Jackweaver
Posts: 1 Newbie
Hi all, looking for some advice on buying our first house
Me and the wife are renting our house in Norwich at the moment – it’s a bit small and we’re trying to save enough for a deposit but really struggling to put enough away each month! Need more space though and pretty soon we’re going to want to paint little one’s bedroom.
We’ve looked at shared ownership but it looks to me like we’d still need a big deposit to buy the first chunk of the sort of house we want – then there’s the question of getting a mortgage. Help to buy is the same – it’s more achievable than a 10% deposit but we’d still need something like £12k!
Caught up with a friend of ours who works in property and he’s mentioned a scheme his company are launching. He explained it to me like this…
- You buy 1% of the house up front then rent the rest from the company (you can buy more upfront if you have the cash) – for us this would be about £2,500
- You then save up just like we are now but use the money to buy chunks of the house over time
- Because you’re renting the outstanding %, you don’t need to have a mortgage, you just kind of buy bits as you go along.
- Legally it’s similar to shared ownership (something to do with a 125 year lease??)…so we can basically do everything a normal owner could (like decorate, have pets etc) anyway.
The monthly cost is pretty much the same as our rent is now so I don’t think we’ll be out of pocket – it’s just knowing whether this is a good option or not!
I’m not all that clued up on mortgages and the whole house purchase world – any honest thoughts on this would be great. Don’t want to only get the sales pitch by going back to him just yet.
Thanks
Me and the wife are renting our house in Norwich at the moment – it’s a bit small and we’re trying to save enough for a deposit but really struggling to put enough away each month! Need more space though and pretty soon we’re going to want to paint little one’s bedroom.
We’ve looked at shared ownership but it looks to me like we’d still need a big deposit to buy the first chunk of the sort of house we want – then there’s the question of getting a mortgage. Help to buy is the same – it’s more achievable than a 10% deposit but we’d still need something like £12k!
Caught up with a friend of ours who works in property and he’s mentioned a scheme his company are launching. He explained it to me like this…
- You buy 1% of the house up front then rent the rest from the company (you can buy more upfront if you have the cash) – for us this would be about £2,500
- You then save up just like we are now but use the money to buy chunks of the house over time
- Because you’re renting the outstanding %, you don’t need to have a mortgage, you just kind of buy bits as you go along.
- Legally it’s similar to shared ownership (something to do with a 125 year lease??)…so we can basically do everything a normal owner could (like decorate, have pets etc) anyway.
The monthly cost is pretty much the same as our rent is now so I don’t think we’ll be out of pocket – it’s just knowing whether this is a good option or not!
I’m not all that clued up on mortgages and the whole house purchase world – any honest thoughts on this would be great. Don’t want to only get the sales pitch by going back to him just yet.
Thanks
0
Comments
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Run a mile.
What happens if you want to sell? Or if the company you're rent/buying from goes bust? Who takes responsibility for repairs?
if you're struggling to save now and would be paying the same under this scheme, how would you be able to save up to buy more percentages? And you'd still only be buying the leasehold?Jackweaver wrote: »The monthly cost is pretty much the same as our rent is now so I don’t think we’ll be out of pocket0 -
You know what they say about things that sound too good to be true...?0
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Or you could save up £500 a month now - in 25 years you would of saved £150,000 plus interest and still have access to your money.0
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You would need to factor into that odd plan legal fees each time you wanted to "buy a bit" of the property.
How much deposit do you currently have?
Makes more sense to starting budgeting properly (debt free forum is helpful for this) and committing to a savings plan before committing to a purchase of any kind.0 -
If the property value rises remember each 1% will cost moreAn answer isn't spam just because you don't like it......0
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That just sounds like shared ownership to me. Albeit a very flexible shared ownership scheme.
Shared ownership can work for some people, but you need to do your research and be aware of the disadvantages.0 -
Schemes like this were around in the late 1970's & 80's. They sort of scraped around under the radar until Thats Life (BBC TV) exposed them.
There is a government backed scheme called Rent to Buy, from what I've read similar to Shared Ownership offered by many HA's and its not a nationwide scheme. A google search reveals nothing re private sector rental purchase & staircasing.0 -
Rent to buy = rent the property for 5 years at under market rental value, allows you to save your mortgage deposit in them 5 years due to the lower rent, get to year 5 and either buy the place with the deposit you saved and mortgage or move out.Mortgage started 2020, aiming to clear 31/12/2029.0
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Never .... touch .... a .... scheme.
Seriously. Never touch a scheme
PLUS
This one has "TROUBLE" written all over it.0 -
Saving for the deposit is part of learning how to save for repairs when you own. If you own a house you have to carry on saving in order to be able to pay if something breaks like a boiler. So really if you can't save the deposit then you are not really in a good position to buy a house.0
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