First time buyer: key worker, how do you afford monthly payments

jonewer

You are quite right to be wary of key worker schemes. I qualify as a "key worker" and wouldnt touch one with someone else's barge pole.

Runninghorse and Ruggedtoast are also quite correct in that they are discriminatory.

Its worth bearing in mind that there is no such thing as a free lunch and that you cant get out for nout. These key worker schemes make it seem like you are getting a free lunch but in fact you are getting trapped into a small new build flat and paying massively over the odds for a very little equity. Because of the various legal ramifications, you will find it very hard to sell and will likely be severly financially disadvanted if you are succesful in doing so.

Seriously, these things are the worst kind of machiavellian nuLab schlenters. DO NOT TOUCH.

ruggedtoast

Running_Horse wrote: »

Oh grow up. Informative, entertaining, and cogent? I've heard more informative, entertaining, and cogent comments from a five year old. I notice you have no useful comments for the OP. Just insults for those who do.

Interesting, especially as your only contribution to the OPs thread was a statement saying you know nothing about KWS's (true, you do know nothing about them), a self referential whinge about the existence of Key-workers and then how society doesnt respect your job making cotton wool for the NHS, or whatever it is you do to earn a living.

RoxieW

Just to share my experience if anyones interested...

We bought our house on shared ownership - not sure if its the same but sounds similar. We bought a 50% share and pay rent on the other 50%. We bought 50% for £60K 4 years ago. £120K was how much the 'private' 3 bed houses were selling at so we didnt pay any mark up. Yes, you do pay rent but on 50% this is a discounted rent of £120. Our mortgage is £420. Ours is the only shared ownership on our street and its a lovely house - certainly not cardboard walls etc. Its 10 years old and we've never had a single problem with leaks/damp/boiler etc.
In my experience shared ownership was a godsend. We had a toddler and a baby and were sick of giving £400 a month to someone in rent. We wanted our own home but when we looked in our price range at the time (around £90K) we were shown depressing council estate slums or crumbling wrecks.
Shared ownership enabled us to live in a lovely family home for not very much more then we were paying in rent and build a bit of equity in our half. We have never felt that the home wasn't ours (although obviously it isn't fully).
The way we see it is not a lose/lose situation but a win/win. We have the the option to buy the other 50% which we could now do, but instead we save the difference towards a deposit for our next house. We've saved over £10K so far. If prices go up (as they have) then we've built equity on our half (now valued at £75K). If they go down then the next house is closer to us in price so we're still winning even if we went into negative equity.
We recently saw a house that we liked and considered selling. The housing association had a waiting list of over 1000 potential buyer. And no estate agents fees.
Perhaps I'm being naive but we're happy with our decision and I'd say to anyone considering such a scheme, if the house is right for you and you cant afford what you want otherwise, then go for it.

We're currently looking at houses around the 200K mark at a similar income to yourselves. We've decided to keep saving and see what happens with the market. The minimum deposit I'd go for is 10%, ideally 20%. Unless you see the 'dream' house that you can afford, I'd say sit tight and save as much as you can. Act as if you have those £1000 mortgage payments to find and save the difference. See if you can adjust your lifestyle to fit. You may decide you're happier taking a lower priced house or (god forbid) going down a shared ownership route for a few years while continuing to save.
Good luck.

ps I dont see people problem with key worker schemes - firefighters have to live within a certain distance to the station but are priced out of many cities (not just london!) If you needed one in an emergency then I'm sure you wouldn't want them having to come in from the backendofbeyond!

nicola1982_2

I wouldn't pay out an entire wage (your g/f's) on mortgage payments. You need some buffer in case your circumstances change - ie one of you lost his/her job, you decide you want kids etc. You deposit is definitely too little if you are eligible for KWS you must live in the south. I'm in the midlands and a respectible deposit for a 2 bed terrace would be at least 9k (we probably have the some of the lowest house prices up here). Surely you'd need around £20k min in KWS areas?

ruggedtoast

RoxieW wrote: »

Just to share my experience if anyones interested...

We bought our house on shared ownership - not sure if its the same but sounds similar. We bought a 50% share and pay rent on the other 50%. We bought 50% for £60K 4 years ago. £120K was how much the 'private' 3 bed houses were selling at so we didnt pay any mark up. Yes, you do pay rent but on 50% this is a discounted rent of £120. Our mortgage is £420. Ours is the only shared ownership on our street and its a lovely house - certainly not cardboard walls etc. Its 10 years old and we've never had a single problem with leaks/damp/boiler etc.
In my experience shared ownership was a godsend. We had a toddler and a baby and were sick of giving £400 a month to someone in rent. We wanted our own home but when we looked in our price range at the time (around £90K) we were shown depressing council estate slums or crumbling wrecks.
Shared ownership enabled us to live in a lovely family home for not very much more then we were paying in rent and build a bit of equity in our half. We have never felt that the home wasn't ours (although obviously it isn't fully).
The way we see it is not a lose/lose situation but a win/win. We have the the option to buy the other 50% which we could now do, but instead we save the difference towards a deposit for our next house. We've saved over £10K so far. If prices go up (as they have) then we've built equity on our half (now valued at £75K). If they go down then the next house is closer to us in price so we're still winning even if we went into negative equity.
We recently saw a house that we liked and considered selling. The housing association had a waiting list of over 1000 potential buyer. And no estate agents fees.
Perhaps I'm being naive but we're happy with our decision and I'd say to anyone considering such a scheme, if the house is right for you and you cant afford what you want otherwise, then go for it.

We're currently looking at houses around the 200K mark at a similar income to yourselves. We've decided to keep saving and see what happens with the market. The minimum deposit I'd go for is 10%, ideally 20%. Unless you see the 'dream' house that you can afford, I'd say sit tight and save as much as you can. Act as if you have those £1000 mortgage payments to find and save the difference. See if you can adjust your lifestyle to fit. You may decide you're happier taking a lower priced house or (god forbid) going down a shared ownership route for a few years while continuing to save.
Good luck.

ps I dont see people problem with key worker schemes - firefighters have to live within a certain distance to the station but are priced out of many cities (not just london!) If you needed one in an emergency then I'm sure you wouldn't want them having to come in from the backendofbeyond!

Nice but I think " We bought 50% for £60K 4 years ago." pretty much sums up the difference berween then and now. Its simply a totally difference market now and most current new build schemes offer the worst value around in an already immensely over valued climate.

I'm not sure how you worked out that if you go into negative equity you're no worse off either, unless the corresponding drop is being knocked off your mortgage for some reason?

redrabbit29

Soprano wrote: »

With respect, have you really thought this through properly?

What I mean is, it sounds like you can only afford something around £900 per month maximum. Which you may be able to find eventually, but is sounds like you haven't considered the interest rates do go up....

I'm really not trying to be as smart @ss either but there are lots of people who took out fixed (low) interest rate loans only to really suffer when that period ended and they have to pay £100's more per month. We're going to see a lot more of that next year..

Thanks for the honest post.

Have I thought it through - hmmm, not really, I'm trying to do that now.

I keep getting told to buy a house, but I've always said I can't afford it. I was seeing if firstly I can, and secondly is it right to try to do so now?

Thanks again.

redrabbit29

RoxieW wrote: »

Just to share my experience if anyones interested...

We bought our house on shared ownership - not sure if its the same but sounds similar. We bought a 50% share and pay rent on the other 50%. We bought 50% for £60K 4 years ago. £120K was how much the 'private' 3 bed houses were selling at so we didnt pay any mark up. Yes, you do pay rent but on 50% this is a discounted rent of £120. Our mortgage is £420. Ours is the only shared ownership on our street and its a lovely house - certainly not cardboard walls etc. Its 10 years old and we've never had a single problem with leaks/damp/boiler etc.
In my experience shared ownership was a godsend. We had a toddler and a baby and were sick of giving £400 a month to someone in rent. We wanted our own home but when we looked in our price range at the time (around £90K) we were shown depressing council estate slums or crumbling wrecks.
Shared ownership enabled us to live in a lovely family home for not very much more then we were paying in rent and build a bit of equity in our half. We have never felt that the home wasn't ours (although obviously it isn't fully).
The way we see it is not a lose/lose situation but a win/win. We have the the option to buy the other 50% which we could now do, but instead we save the difference towards a deposit for our next house. We've saved over £10K so far. If prices go up (as they have) then we've built equity on our half (now valued at £75K). If they go down then the next house is closer to us in price so we're still winning even if we went into negative equity.
We recently saw a house that we liked and considered selling. The housing association had a waiting list of over 1000 potential buyer. And no estate agents fees.
Perhaps I'm being naive but we're happy with our decision and I'd say to anyone considering such a scheme, if the house is right for you and you cant afford what you want otherwise, then go for it.

We're currently looking at houses around the 200K mark at a similar income to yourselves. We've decided to keep saving and see what happens with the market. The minimum deposit I'd go for is 10%, ideally 20%. Unless you see the 'dream' house that you can afford, I'd say sit tight and save as much as you can. Act as if you have those £1000 mortgage payments to find and save the difference. See if you can adjust your lifestyle to fit. You may decide you're happier taking a lower priced house or (god forbid) going down a shared ownership route for a few years while continuing to save.
Good luck.

ps I dont see people problem with key worker schemes - firefighters have to live within a certain distance to the station but are priced out of many cities (not just london!) If you needed one in an emergency then I'm sure you wouldn't want them having to come in from the backendofbeyond!

Thanks. What is all the talk about firefighters? I'm not one btw.

It's hard imaginging trying to save up around £8K+.

Especially as I like to think about saving up a few thousand for emergency money and to put away just incase something happens. Then of course I would ideally like to get a newer car that is a good investment for travelling to work. My car at the minute is 9 years old - good but would like newer one in the next couple of years.

I think I'd best get saving!

[Deleted User]

My fiancee is a key worker (A&E Senior staff nurse).. to be honest, i think her salary is fairly reasonable. She affords a mortgage by letting me pay for it I saved a £12k deposit in 3 years when I was on a salary lower than either of you. I knew it would take a few years and set myself saving targets and goals.

Soprano

redrabbit29 wrote: »

Thanks for the honest post.

Have I thought it through - hmmm, not really, I'm trying to do that now.


I keep getting told to buy a house, but I've always said I can't afford it. I was seeing if firstly I can, and secondly is it right to try to do so now?

Thanks again.

Personally, in your position, I would sit it out for a while.

Not just because house prices are falling (nobody knows how long for or by how much) but because it sounds like you would sink if your projected £900 per month were to jump up in the event of a few interest rate hikes over the few years.

It may sound a little silly, but set up a saving account and bank £180 per month to see how it 'feels' having that much extra go out of your account like it would a mortgage. (You should be saving now anyway, no?)

Again, personally, I think this is a better time to be saving now with prices on the decline, than last year when they were still rising.

With my brand new job, I am also a key worker, but wouldn't go near one of those % ownership new builds schemes either.

PasturesNew

When young, most people save for deposits by taking on a 2nd job or scrimping/saving and doing without.

Even without doing that you could be saving £1000/month between you. So even in 1 year that would be £12k.