Shared ownership with low income

harrietrosie13

Hi all, my husband and I are looking into shared ownership as an option and I have a few questions.

1. We are on universal credit with housing element (we do work, our income is deducted each month). Is this taken into account in a shared ownership affordability assessment? Same local authority.

2. We have a good deposit of 60k. Do they let you use this amount? Eg. The minimum share is £160k and they suggest a deposit of £8k and mortgage of £152k. Would they let us do a £60k deposit and £100k mortgage instead?

We have very good credit scores if that impacts answers, been using things like BorrowBox for years to build it up. No current debt, loans, or credit card debt (except student loans).

ian1246

Best bet is to speak to a mortgage broker with regards to a provider who will factor in universal credit. The housing association who will have a share of the property will have their own financial checks/affordability checks to be conducted.

You can put down as much deposit as you like - the more you put down, the smaller the mortgage and therefore the smaller the payment, meaning more likely to pass affordability checks for the mortgage / housing association! 

£60,000 is good - great job. Don't forget conveyancing costs, moving costs and stamp duty - speaking of which, if either of you have owned a house before you need to get a wriggle on if your buying soon - stamp duty changes on 01st April 2025, dropping from £250,000 to £125,000, meaning a lot more tax to be paid.

If first time buyer, I believe the threshold remains unchanged at £425,000.

whizzywoo

I am unsure how you are claiming Universal Credit if you have a deposit available of £60,000?

marcia_

whizzywoo said:

I am unsure how you are claiming Universal Credit if you have a deposit available of £60,000?

 Can only be transitional protection. 

 But if they have increased their deposit savings since claiming UC it should have been reported. 

chanz4

whizzywoo said:

I am unsure how you are claiming Universal Credit if you have a deposit available of £60,000?

allowed for 12 monhs

gazfocus

I can’t answer your specific question about using universally credit towards an affordability assessment for a mortgage, but I can tell you that the housing associations we spoke to a few years back said they would accept buying the ‘owned’ portion without a mortgage at all so a £60k deposit should be fine. 

That being said, unless there’s a very specific reason why you want to go down the shared ownership route, my advise would be to not do it.

With a £60K deposit, you might find you’d be better off buying 100% of a cheaper house to get on the ladder, especially if you have good credit, etc. 

Our first house was a shared ownership property and here’s our experience:

1: You are responsible for all repair costs (the housing associations won’t pay anything towards repairs).
2: The housing associations will put rent and service charge up each year - we got to the point where we were paying more for the combined mortgage and rent than we would have been paying if we’d bought a house outright. In fact, we are paying less per month now for our 4 bed detached than we were paying for our 3 bed semi shared ownership. 

3: You have to get their permission to do certain things to the house. 

4: In our experience it was much more difficult to sell the house as a shared ownership. Not a huge pool of people looking to buy a shared ownership, then prospective buyers have to be approved by the housing association, you have to pay for the housing association to have the house valued and there’s zero negotiation when they tell you the price they want for their share and to top it all, any reduction in the agreed sale price with your buyer comes off your share only so if the house goes up for sale for £300k and your HA want £150k for their share, and you accept an offer of £280k, the HA still get £150K and you get £130K.