SO or just carry on renting?

TheoFB

Hi just a quick question a house near me has come up for sale 50% for £110,000.

I am currently renting.
I couldn’t afford to buy outright in my area as the price for a 3 bed is around £190,000 upwards and according to online calculators we wouldn’t be able to borrow the amount required

we have no desire to leave, it’s a rural area and houses don’t come upto rent that often so we would be really unhappy if the landlord had other plans and gave us our notice and we had to move so it got us thinking maybe shared ownership will give us that security?

We have managed to get £15,000 in savings but we struggle to save with us renting but do find we have money left over each month so just put that aside

I don’t want to leave the area so with that being said would I be better off going down the shared ownership route?

Could this get us onto the property ladder?

Family of 4.. £35k income not including child benefit and paying £800 a month in rent now

Advice please?

We are both young in our 20’s and we plan to sell our share in the future. The mortgage and rent combined will be less than what we are paying now. The house is a couple of years old.

LeoTLion

I think it is something worth considering.

SO doesn't suit everyone and it is something you need to look into to make sure it is right for you, but given the brief details you have given it seems as though it might be appropriate.

If nothing else a SO property would give you more security than private rental an in my mind that counts for a lot.

I would start by speaking to a broker regarding the mortgage as I think they are a bit more specialist than non SO ones and at least they could give you an answer regarding viability.

getmore4less

The mortgage and rent combined will be less than what we are paying now.

Some of the mortgage will be paying off capital, the sunk cost rent and interest may be quite a bit less than current rent.

What do the numbers look like for the house.
Your mortgage and the rent for the other £110k worth.

2 years old it should have lost some of the new build premium unless they overpiced it

MortgageMamma

I think you should go for it and I think the security is worth more than a small saving on rent every month.

You are a young family and you need to put down roots for your kids sake, I rented myself for many years and we had to move on average every 2.5 years. It is soul destroying to have to uproot and keep moving all the time.

You could eventually buy out the rented portion of your property as the children grow older and you can both work more. As your mortgage part of the arrangement will decrease you can just keep borrowing a bit more until you own it outright.

There are specific shared ownership mortgage products out there.

Also, have you considered the government help to buy scheme?

haras_nosirrah

I am a shared ownership mortgage specialist and am on the panel for 2 housing associations and have been for 10 yrs.

my opinion of shared ownership is a positive one based on the thousands of clients of mine who have done it.

If you can afford the open market that will always be the best option
If you can't then shared ownership beats renting in my opinion as long as you can see yourself staying there long term

If you can staircase great, if not then overpay your mortgage, build up your equity and when you earn more look to move out to the open market.

Sarah

TheoFB

Thanks for all the replies. I am not 100% sure on the numbers but I would be looking to put down a 10% deposit (£11,000) and get a mortgage for the remaining £99,000. The rent on the other half would be around the £250 mark? I’m not certain though as I’ve not looked into it.

What would be the first steps to make from here?

Thank you

haras_nosirrah

Hi Theo

really you need to contact a broker to check the numbers are doable based on what your incomes and outgoings are.

We have the forms for the calculators the housing associations use as you have to fit the housing association calculations as well.

PasturesNew

If you plan to stay there 4+ years or so.... it makes sense to buy a SO just for security if your area has so few properties you could move to if your LL wanted you out.

It's not worth doing it for fewer than 4 years as you could be making it more difficult for yourselves if you needed to move quickly in, say, 1-3 years' time.

Just for "security" .... it's worth it.

There's a cost to selling/buying something else, say £12k or so costs/fees/removal van.
There's a cost of paying rent every month, plus any rent increases and agent additional fees.

Chuck everything into your spreadsheet to see if it really makes sense.

LeoTLion

Speak to the estate agent and get a viewing. They should be able to provide all the information relating to T&C's. Read through them, properly, and make sure you are happy with them.

If you are, speak to a mortgage broker who deals with SO and they will go through affordability and advise you of what information you need to provide.

Once you have done both of the above you should have a clear picture of whether it is viable or not.

dimbo61

No one can be sure if buying the SO property is right for you and your family.
You know what your paying in rent and the property your currently living in ! How good or bad the Landlord and letting agents are.
The age and condition of your rental home.
Location, parking, neighbours !
Number of bedrooms, bathroom/s, downstairs toilet, garden etc
A New build property might have lower running costs, driveway and extra parking but smaller bedrooms !
Lots to consider.
Me I would buy my own place if possible and overpay the mortgage every single month to build up equity and pay down debt.
I call it Plan B and would want to buy the rest of the shared equity as soon as finances allow.
Good luck

TheoFB

The property is pretty much the same house I am renting I can see it out of my window. Same layout and room sizes. The plan would be to stay there for a good 10+ years and hopefully by then we would be in a position to go and buy another house.

The security is a big thing for us as the area is well sought after, as soon as a rental property becomes available it’s let almost instantly!

Thanks again