Shared Ownership - Is it the way to go

Goingitalone84

Following the breakdown of my 10 year relationship I am now renting a property but looking to get back on my feet and on the property ladder.  Shortly before Covid I purchased a new car, never had a brand new one before!  4 months later I am told by 2 mortgage advisors due to being single and only have one income plus what they call "Bad Debt" that is the payment to VW for my new car I would not be considered for the help to buy scheme and may only just qualify for Shared Ownership.  I have approx £7k saved for a deposit which looking at houses is more than than the 5% of 25% share deposit they are asking for, however they say despite what I have savings wise the mortgage lenders will look at my salary outgoings, what I have left and it's just not enough in their eyes.   Has anyone had similar experience, where they are single, maybe have debt whether it be a new car they paying off or credit cards and been successful at Shared Ownership? My salary is pretty good, I am on £30k , the biggest outgoing for me is my car repayments per month alongside rent and bills but I don't see this as bad debt - everyone needs a car right?!  I've come to the fact I won't qualfiy for Help to Buy, so my only last option was SO but now being told I may not even be lucky with that?   My rent is £650pm + bills so I am more than comfortable being able to rent so why not be allowed SO?

rachel230

Shared ownership is absolutely  not the panacea you think it is.
You will be paying mortgage, rent, service charges, ground rent, probably permission fees..
oh as well as full council tax.
It is an unregulated and financially uncapped market. Your costs may start low to lull you in  then will rapidly increase.
It is * not * ownership of anything as they tell you. It is lease/rent.
Do not believe anything sales staff tell you. 
Do not use their "recommended" solicitor whatever threats/bribes they tell you.
Research thoroughly. Then run.

NinjaTune

Mortgage lenders will look at all the outgoings with shared ownership so, as said, all the regular bills plus rent and service charges.  That will lower your mortgage offer significantly as they have to be taken into account as ongoing expenses.  Unlike the mortgaged portion of the property, the rent and service charges will increase year on year.

No disrespect, but buying  a new car is never going to be seen as a wise financial move especially if you are soon going to be applying for a mortgage.  It's a rapidly depreciating asset and you couldn't even afford to buy it outright.

I'd suggest you stay in rented, save more towards your deposit. pay off the shiny new car and build a decent credit rating.  You may then find you qualify for HtB.

Miranda25

NinjaTune said:

Mortgage lenders will look at all the outgoings with shared ownership so, as said, all the regular bills plus rent and service charges.  That will lower your mortgage offer significantly as they have to be taken into account as ongoing expenses.  Unlike the mortgaged portion of the property, the rent and service charges will increase year on year.

No disrespect, but buying  a new car is never going to be seen as a wise financial move especially if you are soon going to be applying for a mortgage.  It's a rapidly depreciating asset and you couldn't even afford to buy it outright.

I'd suggest you stay in rented, save more towards your deposit. pay off the shiny new car and build a decent credit rating.  You may then find you qualify for HtB.

NinjaTune, do you think Help to Buy is better than shared ownership? Thanks.

Goingitalone84

NinjaTune said:

Mortgage lenders will look at all the outgoings with shared ownership so, as said, all the regular bills plus rent and service charges.  That will lower your mortgage offer significantly as they have to be taken into account as ongoing expenses.  Unlike the mortgaged portion of the property, the rent and service charges will increase year on year.

No disrespect, but buying  a new car is never going to be seen as a wise financial move especially if you are soon going to be applying for a mortgage.  It's a rapidly depreciating asset and you couldn't even afford to buy it outright.

I'd suggest you stay in rented, save more towards your deposit. pay off the shiny new car and build a decent credit rating.  You may then find you qualify for HtB.

I don't personally know anyone who can afford to buy a new car outright. I also have never come across anyone with a brand new car who has been told that will affect their mortgage application. Are people not allowed to buy cars if they also want to get on the property ladder? 

zappahey

Goingitalone84 said:

Are people not allowed to buy cars if they also want to get on the property ladder? 

Of course they are, so long as they can still meet the mortgage lender's affordability criteria and it sounds like you don't. Those criteria have tightened up quite considerably over the last few years. 

[Deleted User]

For shared ownership affordability, the mortgage, the SO rent ( 2.75% of unowned share), the service charge AND existing debt payments all must not amount to more than 45% of your net income. Its actually quite tricky for a lot of people who are single unless you have children and Universal Credit pick up the tab for the rental part.

boxer234

I’m in a similar situation having sold my house after a break up (did resist the urge for a new car although was tempted). I looked into shared ownership but do not like it.  I’d rather rent and continue to save.  

When I asked about my dogs they said I’d have to get permission in my eyes that’s not owning my own home.  Also I like the idea of freehold as opposed to leasehold.    These properties are harder to sell and the rent and service charge can go up.  Lack of choice of your house as well.  (I could go I’m sorry negative nelly here)

I currently have enough for a 10% on a smaller property but would like something slightly bigger. 

Goingitalone84

boxer234 said:

I’m in a similar situation having sold my house after a break up (did resist the urge for a new car although was tempted). I looked into shared ownership but do not like it.  I’d rather rent and continue to save.  

When I asked about my dogs they said I’d have to get permission in my eyes that’s not owning my own home.  Also I like the idea of freehold as opposed to leasehold.    These properties are harder to sell and the rent and service charge can go up.  Lack of choice of your house as well.  (I could go I’m sorry negative nelly here)

I currently have enough for a 10% on a smaller property but would like something slightly bigger. 

Sadly the car never was meant to be in the equation!! I had just finished paying payments on my previous car and you name it things started to go wrong!! Out of warranty, I was offered £4k which was extremely generous given how much work was going wrong on it and I thought take away maintenance worries in the future (always had my ex for car issues!) I would get a new car. Granted had I known now things may have been different and I would have got a cheaper car, but I didn't think I would be looking at SO /HtB.  I am the same with renting - I want my own home again, not have to ask to put up shelves or drill nails into walls because I wanted to brighten up the place! 

boxer234

Goingitalone84 said:

boxer234 said:

I’m in a similar situation having sold my house after a break up (did resist the urge for a new car although was tempted). I looked into shared ownership but do not like it.  I’d rather rent and continue to save.  

When I asked about my dogs they said I’d have to get permission in my eyes that’s not owning my own home.  Also I like the idea of freehold as opposed to leasehold.    These properties are harder to sell and the rent and service charge can go up.  Lack of choice of your house as well.  (I could go I’m sorry negative nelly here)

I currently have enough for a 10% on a smaller property but would like something slightly bigger. 

Sadly the car never was meant to be in the equation!! I had just finished paying payments on my previous car and you name it things started to go wrong!! Out of warranty, I was offered £4k which was extremely generous given how much work was going wrong on it and I thought take away maintenance worries in the future (always had my ex for car issues!) I would get a new car. Granted had I known now things may have been different and I would have got a cheaper car, but I didn't think I would be looking at SO /HtB.  I am the same with renting - I want my own home again, not have to ask to put up shelves or drill nails into walls because I wanted to brighten up the place! 

I know I feel the same but I am happy in my rented so can wait.  I could never afford to own the house I rent especially in this area so it’s ok.  I had to take a loan out when I left my ex as I was renting and paying the mortgage so have been paying that off.  

I think SO put me off as it wouldn’t be quite mine.  The comment she made about my dogs was the nail in the coffin for me.  I don’t want to have to ask permission in my home obviously my landlord knows and I paid a bigger deposit. 

wjr4

Personally, I wouldn’t have bought a brand new car before I look to buy a property. On £30k, you need to be saving more. How much are your car repayments and how much debt is left for the car?