Shared Ownership: is it worth it?

Adezoo

Hi, I am in the process of buying a shared ownership new build (3 bedrooms, 1 bathroom, 1 WC) with estimated completion in April 2023. It requires a deposit of £5500 and part rent part buy. I would buy 50% of it which is £100,000. This as 2 year fixed mortgage which comes around £600 a month, plus £229 for the rent and £20 service charge. Total around £849. I don't know, does it sounds like a good deal or should I wait save more or just not bother? Thanks for any help. 

housebuyer143

Shared ownership is good for those people who will never be able to buy a house without it. As in those were the bank will only lend them 100,000 and the cheapest affordable house is 250,000. For example. There is almost no chance someone like that can save 150,000 and so shared ownership is perfect for them.

My sister is currently buying a shared ownership property and it works well for her because she will be able to claim 100% of the rent share from universal credit and only pay the mortgage share herself. It actually makes her significantly better off the way. She currently is renting and gets no universal credit because she has that deposit for her house which puts her over the saving threshold even though they are struggling financially.

In your case if you can afford to buy a property without shared ownership you definitely should. It's not the solution for somebody who can get on the ladder another way

freesha

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyer?

Adezoo

freesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyerfreesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyer?

housebuyer143 said:

Shared ownership is good for those people who will never be able to buy a house without it. As in those were the bank will only lend them 100,000 and the cheapest affordable house is 250,000. For example. There is almost no chance someone like that can save 150,000 and so shared ownership is perfect for them.

My sister is currently buying a shared ownership property and it works well for her because she will be able to claim 100% of the rent share from universal credit and only pay the mortgage share herself. It actually makes her significantly better off the way. She currently is renting and gets no universal credit because she has that deposit for her house which puts her over the saving threshold even though they are struggling financially.

In your case if you can afford to buy a property without shared ownership you definitely should. It's not the solution for somebody who can get on the ladder another way

That's good on your sister, that seems to work well in her favour. Yes I've been thinking a lot about it, and even the interests have gone up. I was shocked to see a property of £100,000 at £600 a month, used to see it around half of that

Adezoo

freesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyer?

Apologies. I am a first time buyer currently on £30K a year, I have a second employment but they don't count that as it's zero hour contract. No co-buyer at the moment. 

DE_612183

I would - don't forget you can also "staircase" further down the line.

Sounds like you are buying half a house for £600 a month and renting the other half for £229.

Unless you can find a property for sale for £140k that meets your needs this is the best way to go.

I presume you are just renting at the moment - so all rent money is dead - at least with a mortgage you are paying off capital, which is an investment for the future.

Adezoo

DE_612183 said:

I would - don't forget you can also "staircase" further down the line.

Sounds like you are buying half a house for £600 a month and renting the other half for £229.

Unless you can find a property for sale for £140k that meets your needs this is the best way to go.

I presume you are just renting at the moment - so all rent money is dead - at least with a mortgage you are paying off capital, which is an investment for the future.

I don't know if I want to staircase but it would be a good investment if after the 2 years I sold it and made some profit to invest into an even bigger property. At the moment I am living with my mom, and it's getting a bit tight, I am also planning to start a family soon and need the space

DE_612183

Staircasing is always good as you are increasing your investment and also reducing your rent at the same time.

By having your "foot on the ladder" you will be contributing to the future equity you hold in the property, and hopefully if prices increase, you'll also benefit from that.

If you are living with mom at the moment don't forget to do a proper budget - all the things you take for granted that you'll now have to pay for; Utilities, Insurance, food!

Adezoo

DE_612183 said:

Staircasing is always good as you are increasing your investment and also reducing your rent at the same time.

By having your "foot on the ladder" you will be contributing to the future equity you hold in the property, and hopefully if prices increase, you'll also benefit from that.

If you are living with mom at the moment don't forget to do a proper budget - all the things you take for granted that you'll now have to pay for; Utilities, Insurance, food!

Yes that's also true, but I think the property will be good for my current needs, but they might change later on. In 2 years I might be in a stronger position, and be able to buy an other property that suits my needs even more. I can still contribute to the aesthetic of the house which might help making it easier to sell after.

Yes I have been budgeting for most of them as I do take care of them at the moment. I would say I would still have enough to cover the everything and still have much left plus savings in case of emergencies

housebuyer143

Adezoo said:

freesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyerfreesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyer?

housebuyer143 said:

Shared ownership is good for those people who will never be able to buy a house without it. As in those were the bank will only lend them 100,000 and the cheapest affordable house is 250,000. For example. There is almost no chance someone like that can save 150,000 and so shared ownership is perfect for them.

My sister is currently buying a shared ownership property and it works well for her because she will be able to claim 100% of the rent share from universal credit and only pay the mortgage share herself. It actually makes her significantly better off the way. She currently is renting and gets no universal credit because she has that deposit for her house which puts her over the saving threshold even though they are struggling financially.

In your case if you can afford to buy a property without shared ownership you definitely should. It's not the solution for somebody who can get on the ladder another way

That's good on your sister, that seems to work well in her favour. Yes I've been thinking a lot about it, and even the interests have gone up. I was shocked to see a property of £100,000 at £600 a month, used to see it around half of that

Yeah, rates have gone nuts but they are coming down slowly so keep looking. 
In your case, unless houses are going for £150k you will probably benefit from shared ownership. It's good to get on the ladder but definitely look into the pit falls. I believe selling them is not as easy as one would hope.

Adezoo

housebuyer143 said:

Adezoo said:

freesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyerfreesha said:

Depends entirely on your circumstances, of which you've told us nothing. What is your wage? Any co-buyer?

housebuyer143 said:

Shared ownership is good for those people who will never be able to buy a house without it. As in those were the bank will only lend them 100,000 and the cheapest affordable house is 250,000. For example. There is almost no chance someone like that can save 150,000 and so shared ownership is perfect for them.

My sister is currently buying a shared ownership property and it works well for her because she will be able to claim 100% of the rent share from universal credit and only pay the mortgage share herself. It actually makes her significantly better off the way. She currently is renting and gets no universal credit because she has that deposit for her house which puts her over the saving threshold even though they are struggling financially.

In your case if you can afford to buy a property without shared ownership you definitely should. It's not the solution for somebody who can get on the ladder another way

That's good on your sister, that seems to work well in her favour. Yes I've been thinking a lot about it, and even the interests have gone up. I was shocked to see a property of £100,000 at £600 a month, used to see it around half of that

Yeah, rates have gone nuts but they are coming down slowly so keep looking. 
In your case, unless houses are going for £150k you will probably benefit from shared ownership. It's good to get on the ladder but definitely look into the pit falls. I believe selling them is not as easy as one would hope.

Thanks for the reply. Yes I agree, it's quite difficult to find 3 bedrooms for that price and semi detached at least in my area. There was a good one for £140,000 but got sold. My only option would be to either get this house through SO or register with house agents to be shown property before they hit the market. But I don't want to regret not getting it