first time buyers using shared ownership

Rebecca5833

Me and my partner have got a viewing tomorrow on a 2 bedroom house shared ownership property in Tenterden in Kent. We was contacted to say that a sale had fallen through and asked if we wanted to view it. We have already been accepted on the shared ownership scheme however I have heard horror stories regarding the shared ownership, unfortunately we live in a very expensive area for buying a house. We are first time buyers and our annual salary varies as i work as cabin crew but usually it is around £62000 a year for us both. I had some questions and wondering if anyone thinks it is worth doing? We just want to get on the property ladder as renting in my area is a bit more than doing shared ownership however we haven't got the larger deposit to do the equity loan.

1. What type of mortgage is best for a shared ownership?

2. How long does the mortgage last if you decide to stay there? like as in 25/35 years? We will probably try and sell 5/6 years later, which i have read is better, is this true?

4. Is it worth just owning say 25% if we want to sell in a few years?

3. How easy is it to get out of it?

4. Can we negotiate on the price, as it has fallen through can we see if we can get it for lower?

5. Will we have to pay any stamp duty on the property with 25% share?

6. Would you buy a house with everything at the moment?

7. Also it says they pay £500 towards legal fees? how much are the average solicitor fees.. first time buyer so not sure!

Many thanks for any replies

Rebecca

KcEliMa

I’m really sorry, I can’t answer all your questions. 

What I can though...

Legal Fees- you’re usually looking at an average of £1500 in conveyancing fees. This is for all local searches and land registry fees plus the solicitors own legal charges. 

Stamp Duty - as first time buyers, you’re not liable for Stamp Duty for any property purchased up to the purchase price of £300,000. 

The rest is simply just my opinion. I would really only consider SO if the area I was looking to purchase in really was hugely expensive and out of my budget regardless of savings, affordability etc. Even then I’d be wary. Especially for only a 25% share. When we looked into SO, the rent + mortgage+ service charge was ridiculous, I don’t actually know how people find it more affordable?! 

With such a good annual income between you, in your position, I would just look to save hard and fast for a year or more. 

I know it’s hard when having to private rent etc. 

Have you looked into your affordability with adjusting your loan term etc? Seeing what you will/ could borrow if your LTV was higher? 

ChloeManoey

It doesn't really sound like you need to buy shared ownership. With a combined salary of 62k, you'd get a mortgage of minimum 250k, then add on any deposit you have. Shared ownership is meant for people who cannot buy on the open market. 

I am buying shared ownership because I am on my own, and it is preferable to renting forever more. My rent is £815 a month at the moment. My new rent + mortgage + service charge will be about £610. With the added security that I can't be asked to leave at the will of the landlord, I'm building up equity etc etc. 

In answer to some of your questions. Your mortgage term is whatever you choose it to be. I'm not sure what you mean about the type of mortgage, but it's a little more limited as not all mortgage products can be used for shared ownership. I think it's unlikely you'll be able to negotiate on the price but you can give it a go! In terms of "getting out of it", I'm in Brighton and shared ownership places are snapped up in a blink, I had to wait a long time for mine! If it's in a popular place then it shouldn't be too much of an issue. My conveyancing fees are approx 1.5k

NinjaTune

25% seems like a low amount to own, and if you're planning to move in 5 or 6 years then presumably you don't intend to staircase.  The good thing about 25% is it will make it more affordable to others when you come to sell, however, on your combined wages I would be looking for an outright purchase even if that means a smaller property to get you on the ladder.

Reselling can be a bit restrictive, assuming it's the same with your housing association as the ones in our area.  Properties tend to have a fixed price for resale and I'm not sure how much say you have in it.  Remember that the HA will own 75% of 'your' property.  You also have to offer the property for resale initially through the HA; it's only after a certain period without it selling that it can be placed on the open market.  That's because there are restriction on who can buy the property, e.g. ties to the area and level of income.

The advice about selling after 5 or 6 years will be down to 2 factors - the length of the lease decreasing and the amount of the rent/service charges increasing.  New builds usually offer 99 year leases which is fine for the first owner selling within the first 10 years.  The slippery slope starts when the lease hits 80 years or less which affects the value of the property, unless you get agreement to extend the lease (which can be costly).

I don't know Tenterden, so don't know what are the good and bad areas but a quick look at Right Move shows properties you could buy outright on your wages.

csgohan4

Tenterden is an expensive part, if you can, don't use SO, it has all the cons of buying with not much of the pros. You will be responsible for 100% repair costs and as above your list of buyers will be limited.

Rebecca5833

many thanks for all your replies. We would love to be able to buy a house without the shared ownership, however as I’m on furlough and I’ve just ended maternity leave, we can only borrow up to £220k and we are still short to buy a 2/3 bed property in my area on the help the buy equity loan, and with my job all mortgage brokers have said we can get a mortgage when I’m back flying as normal, which won’t be till next year at the latest. 

KcEliMa

Rebecca5833 said:

many thanks for all your replies. We would love to be able to buy a house without the shared ownership, however as I’m on furlough and I’ve just ended maternity leave, we can only borrow up to £220k and we are still short to buy a 2/3 bed property in my area on the help the buy equity loan, and with my job all mortgage brokers have said we can get a mortgage when I’m back flying as normal, which won’t be till next year at the latest. 

I know you’re eager to purchase, we are too! But I don’t think SO is your answer. I think altering you search criteria, changing your mile radius and ‘playing about with figures’ (to put it bluntly) will yield better results. £220k is a good amount for a FTB! We’re £40k less than that, and that’s with an application for a 34yr term! We originally was looking at £160k purchase price for a 25yr term. 

If you’re not in a position to buy now until you return to work (I hope you’re not with BA, sad news yesterday) then I would just concentrate on building up a good deposit, it can make a big difference with loan amounts. 

Good luck! 

Rebecca5833

many thanks for all your replies, the lady from the housing association, has put us down as we will reserve it, we just need to pay the reserve fee, however I have spoken to a few mortgage brokers and as I work for an airline with possible redundancies, they are not sure we will be accepted for the mortgage, even though we have been accepted on affordability.  When we had the viewing i mentioned to the lady if it is a problem if we can move in say in 3 months time and she said when we reserve it, it is ours. I am wondering if i should re start my search for a mortgage after i am told if i have lost my job and try again then, will we possibly have more luck? We really want the house and the lady is cancelling viewings next week, we just really hope they will be understanding and letting us wait.

Many thanks