Shared ownership is this the best move.

sheramber

simon_grimshaw said:

Probably but she has alot on.
shes non stop. Also very difficult as i work 60 hours per week 

Are you aware of the  commitments your wife will have once your youngest child is  3 , unless your oldest child gets DLA?

Age between 3 and 12	You will be expected to work up to 30 hours a week, or spend up to 30 hours a week on work-related activities such as applying for jobs.
Age 13 or over	You will be expected to work up to 35 hours a week, or spend up to 35 hours a week on work-related activities such as applying for jobs.

ian1246

simon_grimshaw said:

Thanks for the advice. 

The house prices are to much 1500 a month for 30 years.
pretty depressing

Respectfully, I think your being shortsighted.

The way shared ownership works is the share you dont own has a value attributed to it - that value is then multiplied by X% - normally 2ish% - divide that by 12 and thats the monthly rent payment.

That means in the long run, that rent payment is only ever going to go up - potentially faster than normal inflation.

On the other hand... once you've taken out a mortgage, the capital is only going to go down. Its true the mortgage could fluctuate depending on the interest rate, but thats where fixed rates for 5 or 10 years offer security i.e. over the course of those 5 years, odds are high you'll have had a bunch of payrises, so even if coming off that fix the interest rate has jumped, you'll likely have the income to service the increased mortgage payments. There's also every possibility you'll get a lower rate (interest rates dropping or decreased loan to value rates).

The key difference, though, is other than interest rate fluctuations the mortgage amount remains fixed - whilst over the 30 or 40 years of the mortgage, your income increases with inflation.

That means your mortgage will represent an ever shrinking % of your income, whereas rent will likely keep up / exceed inflation.

Its worth remembering you can put the mortgage over very long periods (into retirement) of time to bring down contractual monthly payments, then overpay the mortgage when you have flexibility to do so to reduce the term back down to before your retirement age.

Basically, if you have the ability to buy a property where you own 100% of it (albeit mortgaged), your going to be a lot better off in the long run vs. Part-renting.

Edit: the only exception will be where you max out the mortgage for a shared ownership (buying the largest share you can) then use Universal Credit to cover the rent part whilst aggressively overpaying the mortgage, then remortgage when your fix is due - again maxing out the mortgage to buy a larger portion of the property (baring in mind if the values gone up, the cost per % will have increased). Rinse and repeat until you get to 100% ownership.

The cumulative legal costs though for multiple purchases of your shared ownership until 100% will likely be quite high.

Edit - just saw your post about £1500 mortgage vs £1150 cost for shared ownership. Presumably that £1500 reflects how much you can borrow with a mortgage company and therefore just about afford?

In which case, going the shared ownership route could work- use £1150 to cover the mortgage / rent, then chuck the left over £350 at the mortgage as an overpayment. You mentioned you'd still get £450 UC house allowance? That's another £450 income effectively, so use that to overpay also.

That would be a £800 a month overpayment to build equity - allowing you to remortgage and buy a large chunk of your property every time your fix is due to expire. Effectively staircasing to 100% whilst getting the taxpayer to cover a large portion of the cost (rent).

By overpaying, you'd be building capital in your house without worrying about declining universal credit amounts (savings over £6000 = reduced UC entitlement).

strawb_shortcake

Is your deposit going to impact the level of UC you get before the sale goes through?

Future pay rises and  promotions can all impact your eligibility for UC, are you going to purposely keep your salary at a level to continue getting UC? 
Any future inheritance (over £16k) will stop your UC, would you really want to use this for rent? 

One day your children will be adults and this will impact the UC you claim and you may see it stop all together, especially if your wife then has work commitments.

I get you want stability, but to pay 25% over 10 years and be left with a rent liability and 100% maintenance, would not be appealing to me. 
If you are reliant on UC your savings and emergency fund can't exceed £16k, you'd probably be looking at a similar amount for a new roof.

I'd be looking to see what I can afford for a 3 bed owning 100%.

Reliance on benefits seems a risky strategy. 
I do say this as someone who bought up a family with the help of tax credits, had I not worked to further myself as my children grew, my current situation and future would be pretty dire as that support would be coming to an end now.

simon_grimshaw

sheramber said:

simon_grimshaw said:

Probably but she has alot on.
shes non stop. Also very difficult as i work 60 hours per week 

Are you aware of the  commitments your wife will have once your youngest child is  3 , unless your oldest child gets DLA?

Age between 3 and 12	You will be expected to work up to 30 hours a week, or spend up to 30 hours a week on work-related activities such as applying for jobs.
Age 13 or over	You will be expected to work up to 35 hours a week, or spend up to 35 hours a week on work-related activities such as applying for jobs.

No mate thats not true. Thats if you claim job seekers. Rules are different for working familys.

simon_grimshaw

ian1246 said:

simon_grimshaw said:

Thanks for the advice. 

The house prices are to much 1500 a month for 30 years.
pretty depressing

Respectfully, I think your being shortsighted.

The way shared ownership works is the share you dont own has a value attributed to it - that value is then multiplied by X% - normally 2ish% - divide that by 12 and thats the monthly rent payment.

That means in the long run, that rent payment is only ever going to go up - potentially faster than normal inflation.

On the other hand... once you've taken out a mortgage, the capital is only going to go down. Its true the mortgage could fluctuate depending on the interest rate, but thats where fixed rates for 5 or 10 years offer security i.e. over the course of those 5 years, odds are high you'll have had a bunch of payrises, so even if coming off that fix the interest rate has jumped, you'll likely have the income to service the increased mortgage payments. There's also every possibility you'll get a lower rate (interest rates dropping or decreased loan to value rates).

The key difference, though, is other than interest rate fluctuations the mortgage amount remains fixed - whilst over the 30 or 40 years of the mortgage, your income increases with inflation.

That means your mortgage will represent an ever shrinking % of your income, whereas rent will likely keep up / exceed inflation.

Its worth remembering you can put the mortgage over very long periods (into retirement) of time to bring down contractual monthly payments, then overpay the mortgage when you have flexibility to do so to reduce the term back down to before your retirement age.

Basically, if you have the ability to buy a property where you own 100% of it (albeit mortgaged), your going to be a lot better off in the long run vs. Part-renting.

Edit: the only exception will be where you max out the mortgage for a shared ownership (buying the largest share you can) then use Universal Credit to cover the rent part whilst aggressively overpaying the mortgage, then remortgage when your fix is due - again maxing out the mortgage to buy a larger portion of the property (baring in mind if the values gone up, the cost per % will have increased). Rinse and repeat until you get to 100% ownership.

The cumulative legal costs though for multiple purchases of your shared ownership until 100% will likely be quite high.

Edit - just saw your post about £1500 mortgage vs £1150 cost for shared ownership. Presumably that £1500 reflects how much you can borrow with a mortgage company and therefore just about afford?

In which case, going the shared ownership route could work- use £1150 to cover the mortgage / rent, then chuck the left over £350 at the mortgage as an overpayment. You mentioned you'd still get £450 UC house allowance? That's another £450 income effectively, so use that to overpay also.

That would be a £800 a month overpayment to build equity - allowing you to remortgage and buy a large chunk of your property every time your fix is due to expire. Effectively staircasing to 100% whilst getting the taxpayer to cover a large portion of the cost (rent).

By overpaying, you'd be building capital in your house without worrying about declining universal credit amounts (savings over £6000 = reduced UC entitlement).

Thanks for that mate . It helped.
A just for the life of me cant bare  to pay 1500 a month till im 70 for a house whats small or one in a bad area.
If there was i would prefer this option.
I also pay quite a bit in my pension 8k a year
So a should have a decent one to help we rent when im older.

simon_grimshaw

strawb_shortcake said:

Is your deposit going to impact the level of UC you get before the sale goes through?

Future pay rises and  promotions can all impact your eligibility for UC, are you going to purposely keep your salary at a level to continue getting UC? 
Any future inheritance (over £16k) will stop your UC, would you really want to use this for rent? 

One day your children will be adults and this will impact the UC you claim and you may see it stop all together, especially if your wife then has work commitments.

I get you want stability, but to pay 25% over 10 years and be left with a rent liability and 100% maintenance, would not be appealing to me. 
If you are reliant on UC your savings and emergency fund can't exceed £16k, you'd probably be looking at a similar amount for a new roof.

I'd be looking to see what I can afford for a 3 bed owning 100%.

Reliance on benefits seems a risky strategy. 
I do say this as someone who bought up a family with the help of tax credits, had I not worked to further myself as my children grew, my current situation and future would be pretty dire as that support would be coming to an end now.

My deposit for a shared ownership is 4500.
no stamp duty fees  an around the 3k mark for solicitor.
I have a watch what im selling worth around 12k.

Benefits wise  we wont be on them in the future my wife will work when the times right.


But yeah i keep my salary lower on UC i pay more into a pension and have a car on salary sacrifice.

Al there is for my price range is an ex council estate house or a small 3 bedroom somewhere okay.

I currently rent now paying 1500 all though i get 950 housing benefit  which helps.

Yeah the maintenance is the downside nothings perfect. 

Myci85

Not all ex council estates are awful, and some ex council houses are built much bigger and better than modern newbuilds. We bought an ex council in a lovely village, our house is probably 1.5x the size of the newbuild shared ownership houses we viewed, plus far bigger garden, garage, outbuildings for storage etc. 

Also, as a previous poster suggested, £1500 per month on a mortgage now sounds tough (that's about what we pay) but as wages etc increase, that £1500 won't seem as steep, plus you can hopefully reduce it to a smaller amount over time, or shorten the length of your mortgage so you will then have no rent or mortgage costs at all.  Whereas in 20 years time, chances are rent prices will have way exceeded that £1500 and you'd be paying them for the rest of retirement. 

Emmia

Myci85 said:

Not all ex council estates are awful, and some ex council houses are built much bigger and better than modern newbuilds. We bought an ex council in a lovely village, our house is probably 1.5x the size of the newbuild shared ownership houses we viewed, plus far bigger garden, garage, outbuildings for storage etc. 

Also, as a previous poster suggested, £1500 per month on a mortgage now sounds tough (that's about what we pay) but as wages etc increase, that £1500 won't seem as steep, plus you can hopefully reduce it to a smaller amount over time, or shorten the length of your mortgage so you will then have no rent or mortgage costs at all.  Whereas in 20 years time, chances are rent prices will have way exceeded that £1500 and you'd be paying them for the rest of retirement. 

But the OP isn't worried about the rent as UC is covering that part.

simon_grimshaw

I agree about the council
houses nothing wrong with them. The area were we are the council estates are very sketchy i dont want to raise my children there.

Extending wont be possible how long to extended. 1500 a month is till i am  70.

Im not sure how much the rent part goes up with a house association but it cant be worse than the increase i have had in private rent.

Retirement wise you get help.Sure things can change but i have never seen a change yet.

I still have another few more months yet to decide what to do, but to anyone who has been in  my situation , 40 year old raising 3 kids
in private rent its just  GRIM.

simon_grimshaw

sheramber said:

simon_grimshaw said:

Probably but she has alot on.
shes non stop. Also very difficult as i work 60 hours per week 

Are you aware of the  commitments your wife will have once your youngest child is  3 , unless your oldest child gets DLA?

Age between 3 and 12	You will be expected to work up to 30 hours a week, or spend up to 30 hours a week on work-related activities such as applying for jobs.
Age 13 or over	You will be expected to work up to 35 hours a week, or spend up to 35 hours a week on work-related activities such as applying for jobs.

Yeah we get Dla and she is on carers allowance