Shared ownership is this the best move.

Emmia

ian1246 said:

simon_grimshaw said:

ian1246 said:

Op, I'd stop fixating on Universal Credit - you mentioned how you've deliberately kept your income low to keep yourself claiming it and now your talking about deciding on a house purchase based on it.

Have you ran the figures to see if you'd be better off by maximising your income? I.e. How much more income will you have if you ditch the company car & buy a 2nd hand one outright?

You also only need a future governments to change the universal credit rules to factor in deductions for employee benefits (like the car) as a form of income and your then potentially up a creek without a paddle (no UC - so no housing allowance - and contractually committed to a car on finance). Make no mistake - future governments are going to tightening up the welfare budget.

The same for your maximised pension contributions - having a good pension is fantastic- except i suspect everything your chucking into it is a false economy if your going to be renting in retirement. 

Are you even going to get help from the government in retirement? I dont know a lot about how pension credit works, but most pensions now are defined contribution - meaning a pot of money which you can either withdraw steadily from or exchange for an annuity - a guaranteed life time income.

If you keep the pot of money, I'd be staggered if your eligible for help if your sat on a pot of £100,000's. If you exchange it for an annuity, you'll probably be far worse off & poorer due to how bad those rates can be - particularly if you want an inflation linked annuity with spousal benefits.

From an objective point of view, I'd really encourage you to review everything & decide what you want in life. At age 40 your still relatively young - most people dont get their first home until 34years old and unlike them, it sounds like your nearly through the financially difficult nursery-fee's stage og having kids - once the kids hit School costs fall through the floor & you could find with your wife's income - and you maximising yourself rather than artificially lowering it - that you really could get what you want.

Please do sit down and run the figures - toy with different scenarios, including ditching the company car / reducing pension contributions etc..

Thanks for the reply mate.

So car wise i do 25k miles a year. I have a electric car which takes 550 out my take home pay all included insurance mateinance etc.
I save so much on fuel. But on UC its based of net pay so less you earn UC goes up by 55%
so the car is costing 250 a month.
way cheaper than owning a used car.

Same with the pension i pay 20% which reduces
my net pay by 480. But UC goes up so i am worse off  by 220. I do this because being stuck in private rent at least i could do is have a decent pension.

My plan was spend it all an enjoy life when i am older.  On shared ownership you get help around 80% of the rent in retirement .

I have no doubt future governments will tighen things up for sure. But help in retirement has always been there.

Based on your figures, you really do need to double check at the very least about your pension - your pension pot is likely to be in the £100,000's+ territory, which means you will not qualify for governmental support during retirement. You could probably exchange it for an Annuity, which would be a fixed income for the rest of your life - but even that may bump you past the threshold for support, at the expense of loosing £100,000's of ££ for a not very good deal. Often people are much better off drawing their pensions down rather than purchasing an Annuity, plus the remaining money can form part of your estate upon death. A Annuity dies with you.

I actually think your definitely making the wrong decision going down the shared ownership route. Cut your pension down to the minimum 5% (& let stocks and shares grow your existing pension) and that's £360 extra you've found.

In the long run, your mortgage costs will remain fixed whilst rent on the shared ownership will rise to reflect increased house value or inflation - for the sake of a couple of years of budget being tight, before pay-rises reduce the burden of the mortgage payments, isn't 100% Home Ownership worth it? That's your retirement made immeasurably safer and with the growth in equity in your property, odds are high you could afford somewhere larger / more comfortable within a few years.

Good luck either way - but please do double check about your pension. I think assuming your going to get government support is a potentially colossal mistake (if you don't get it, your retirement is going to be a lot poorer than your anticipating due to shared ownership rent).

The OP isn't worried about the rent increasing as they get benefits to cover it (currently) and they're working on the basis this will continue through their retirement. They only need to worry about service charges + mortgage costs.

marcia_

Emmia said:

ian1246 said:

simon_grimshaw said:

ian1246 said:

Op, I'd stop fixating on Universal Credit - you mentioned how you've deliberately kept your income low to keep yourself claiming it and now your talking about deciding on a house purchase based on it.

Have you ran the figures to see if you'd be better off by maximising your income? I.e. How much more income will you have if you ditch the company car & buy a 2nd hand one outright?

You also only need a future governments to change the universal credit rules to factor in deductions for employee benefits (like the car) as a form of income and your then potentially up a creek without a paddle (no UC - so no housing allowance - and contractually committed to a car on finance). Make no mistake - future governments are going to tightening up the welfare budget.

The same for your maximised pension contributions - having a good pension is fantastic- except i suspect everything your chucking into it is a false economy if your going to be renting in retirement. 

Are you even going to get help from the government in retirement? I dont know a lot about how pension credit works, but most pensions now are defined contribution - meaning a pot of money which you can either withdraw steadily from or exchange for an annuity - a guaranteed life time income.

If you keep the pot of money, I'd be staggered if your eligible for help if your sat on a pot of £100,000's. If you exchange it for an annuity, you'll probably be far worse off & poorer due to how bad those rates can be - particularly if you want an inflation linked annuity with spousal benefits.

From an objective point of view, I'd really encourage you to review everything & decide what you want in life. At age 40 your still relatively young - most people dont get their first home until 34years old and unlike them, it sounds like your nearly through the financially difficult nursery-fee's stage og having kids - once the kids hit School costs fall through the floor & you could find with your wife's income - and you maximising yourself rather than artificially lowering it - that you really could get what you want.

Please do sit down and run the figures - toy with different scenarios, including ditching the company car / reducing pension contributions etc..

Thanks for the reply mate.

So car wise i do 25k miles a year. I have a electric car which takes 550 out my take home pay all included insurance mateinance etc.
I save so much on fuel. But on UC its based of net pay so less you earn UC goes up by 55%
so the car is costing 250 a month.
way cheaper than owning a used car.

Same with the pension i pay 20% which reduces
my net pay by 480. But UC goes up so i am worse off  by 220. I do this because being stuck in private rent at least i could do is have a decent pension.

My plan was spend it all an enjoy life when i am older.  On shared ownership you get help around 80% of the rent in retirement .

I have no doubt future governments will tighen things up for sure. But help in retirement has always been there.

Based on your figures, you really do need to double check at the very least about your pension - your pension pot is likely to be in the £100,000's+ territory, which means you will not qualify for governmental support during retirement. You could probably exchange it for an Annuity, which would be a fixed income for the rest of your life - but even that may bump you past the threshold for support, at the expense of loosing £100,000's of ££ for a not very good deal. Often people are much better off drawing their pensions down rather than purchasing an Annuity, plus the remaining money can form part of your estate upon death. A Annuity dies with you.

I actually think your definitely making the wrong decision going down the shared ownership route. Cut your pension down to the minimum 5% (& let stocks and shares grow your existing pension) and that's £360 extra you've found.

In the long run, your mortgage costs will remain fixed whilst rent on the shared ownership will rise to reflect increased house value or inflation - for the sake of a couple of years of budget being tight, before pay-rises reduce the burden of the mortgage payments, isn't 100% Home Ownership worth it? That's your retirement made immeasurably safer and with the growth in equity in your property, odds are high you could afford somewhere larger / more comfortable within a few years.

Good luck either way - but please do double check about your pension. I think assuming your going to get government support is a potentially colossal mistake (if you don't get it, your retirement is going to be a lot poorer than your anticipating due to shared ownership rent).

The OP isn't worried about the rent increasing as they get benefits to cover it (currently) and they're working on the basis this will continue through their retirement. They only need to worry about service charges + mortgage costs.

 Which they probably wont qualify for if they have private pension income 

simon_grimshaw

ian1246 said:

simon_grimshaw said:

ian1246 said:

Op, I'd stop fixating on Universal Credit - you mentioned how you've deliberately kept your income low to keep yourself claiming it and now your talking about deciding on a house purchase based on it.

Have you ran the figures to see if you'd be better off by maximising your income? I.e. How much more income will you have if you ditch the company car & buy a 2nd hand one outright?

You also only need a future governments to change the universal credit rules to factor in deductions for employee benefits (like the car) as a form of income and your then potentially up a creek without a paddle (no UC - so no housing allowance - and contractually committed to a car on finance). Make no mistake - future governments are going to tightening up the welfare budget.

The same for your maximised pension contributions - having a good pension is fantastic- except i suspect everything your chucking into it is a false economy if your going to be renting in retirement. 

Are you even going to get help from the government in retirement? I dont know a lot about how pension credit works, but most pensions now are defined contribution - meaning a pot of money which you can either withdraw steadily from or exchange for an annuity - a guaranteed life time income.

If you keep the pot of money, I'd be staggered if your eligible for help if your sat on a pot of £100,000's. If you exchange it for an annuity, you'll probably be far worse off & poorer due to how bad those rates can be - particularly if you want an inflation linked annuity with spousal benefits.

From an objective point of view, I'd really encourage you to review everything & decide what you want in life. At age 40 your still relatively young - most people dont get their first home until 34years old and unlike them, it sounds like your nearly through the financially difficult nursery-fee's stage og having kids - once the kids hit School costs fall through the floor & you could find with your wife's income - and you maximising yourself rather than artificially lowering it - that you really could get what you want.

Please do sit down and run the figures - toy with different scenarios, including ditching the company car / reducing pension contributions etc..

Thanks for the reply mate.

So car wise i do 25k miles a year. I have a electric car which takes 550 out my take home pay all included insurance mateinance etc.
I save so much on fuel. But on UC its based of net pay so less you earn UC goes up by 55%
so the car is costing 250 a month.
way cheaper than owning a used car.

Same with the pension i pay 20% which reduces
my net pay by 480. But UC goes up so i am worse off  by 220. I do this because being stuck in private rent at least i could do is have a decent pension.

My plan was spend it all an enjoy life when i am older.  On shared ownership you get help around 80% of the rent in retirement .

I have no doubt future governments will tighen things up for sure. But help in retirement has always been there.

Based on your figures, you really do need to double check at the very least about your pension - your pension pot is likely to be in the £100,000's+ territory, which means you will not qualify for governmental support during retirement. You could probably exchange it for an Annuity, which would be a fixed income for the rest of your life - but even that may bump you past the threshold for support, at the expense of loosing £100,000's of ££ for a not very good deal. Often people are much better off drawing their pensions down rather than purchasing an Annuity, plus the remaining money can form part of your estate upon death. A Annuity dies with you.

I actually think your definitely making the wrong decision going down the shared ownership route. Cut your pension down to the minimum 5% (& let stocks and shares grow your existing pension) and that's £360 extra you've found.

In the long run, your mortgage costs will remain fixed whilst rent on the shared ownership will rise to reflect increased house value or inflation - for the sake of a couple of years of budget being tight, before pay-rises reduce the burden of the mortgage payments, isn't 100% Home Ownership worth it? That's your retirement made immeasurably safer and with the growth in equity in your property, odds are high you could afford somewhere larger / more comfortable within a few years.

Good luck either way - but please do double check about your pension. I think assuming your going to get government support is a potentially colossal mistake (if you don't get it, your retirement is going to be a lot poorer than your anticipating due to shared ownership rent).

Hi mate thanks for  your comment. 

The pension i had in my head was come 57 take 25%  and  go part time  and use the pension to fund the difference 
But basically enjoy life  go to places we always wanted to go etc.
Come retirement  you get roughly 80%rent paid for. 

Still unsure what to do, if house prices wernt what they are  i wouldn't of made this post
because i know the right answer.

simon_grimshaw

yeah thats a bit grim. But i don't pay for fuel as i charge at work. Before i had an electric car i was doing easy 350 a month on fuel.

Altior

There's a huge incentive for those with earned income on UC to maximise pension contributions.

The politics of that incentive is a different topic, but it's certainly there. 

You could definitely use the approach to max contributions and perhaps target fully staircasing using the TFLS.

Personally I would forget about the idea of using benefits in retirement, outside of SP.

The risk you have is legislation change, but we all have that! All we can do is plan around where the goalposts are now, as none of us have a crystal ball. 

The one tip I would reiterate is have an exit plan to fully staircase and gain ownership outright (if using SO). 

simon_grimshaw

Yeah grant things can change. 100% wont be possible the houses are crazy expensive
25% only if a go that route.

Altior

simon_grimshaw said:

Yeah grant things can change. 100% wont be possible the houses are crazy expensive
25% only if a go that route.

Most likely you're already aware of this, but you can overpay the mortgage to reduce your savings/capital if needed (usually 10% annually of the mortgage capital balance). You're also likely eligible for Help To Save if you've not used it before. 

simon_grimshaw

Yeah i have used that help to save.  Its all
about balance for me also
a dont want to pay every single penny i av on a mortgage payment. I want to be able afford to go on holiday with the family and stuff.

Altior

simon_grimshaw said:

Yeah i have used that help to save.  Its all
about balance for me also
a dont want to pay every single penny i av on a mortgage payment. I want to be able afford to go on holiday with the family and stuff.

Yep, I'm just referring to the option if you need to reduce capital, ie keep within UC thresholds.

Whilst you can reduce your net income via pension contributions, that's the no brainer option. But ideally you need some capital available of course for emergency access. 

strawb_shortcake

simon_grimshaw said:

ian1246 said:

simon_grimshaw said:

ian1246 said:

Op, I'd stop fixating on Universal Credit - you mentioned how you've deliberately kept your income low to keep yourself claiming it and now your talking about deciding on a house purchase based on it.

Have you ran the figures to see if you'd be better off by maximising your income? I.e. How much more income will you have if you ditch the company car & buy a 2nd hand one outright?

You also only need a future governments to change the universal credit rules to factor in deductions for employee benefits (like the car) as a form of income and your then potentially up a creek without a paddle (no UC - so no housing allowance - and contractually committed to a car on finance). Make no mistake - future governments are going to tightening up the welfare budget.

The same for your maximised pension contributions - having a good pension is fantastic- except i suspect everything your chucking into it is a false economy if your going to be renting in retirement. 

Are you even going to get help from the government in retirement? I dont know a lot about how pension credit works, but most pensions now are defined contribution - meaning a pot of money which you can either withdraw steadily from or exchange for an annuity - a guaranteed life time income.

If you keep the pot of money, I'd be staggered if your eligible for help if your sat on a pot of £100,000's. If you exchange it for an annuity, you'll probably be far worse off & poorer due to how bad those rates can be - particularly if you want an inflation linked annuity with spousal benefits.

From an objective point of view, I'd really encourage you to review everything & decide what you want in life. At age 40 your still relatively young - most people dont get their first home until 34years old and unlike them, it sounds like your nearly through the financially difficult nursery-fee's stage og having kids - once the kids hit School costs fall through the floor & you could find with your wife's income - and you maximising yourself rather than artificially lowering it - that you really could get what you want.

Please do sit down and run the figures - toy with different scenarios, including ditching the company car / reducing pension contributions etc..

Thanks for the reply mate.

So car wise i do 25k miles a year. I have a electric car which takes 550 out my take home pay all included insurance mateinance etc.
I save so much on fuel. But on UC its based of net pay so less you earn UC goes up by 55%
so the car is costing 250 a month.
way cheaper than owning a used car.

Same with the pension i pay 20% which reduces
my net pay by 480. But UC goes up so i am worse off  by 220. I do this because being stuck in private rent at least i could do is have a decent pension.

My plan was spend it all an enjoy life when i am older.  On shared ownership you get help around 80% of the rent in retirement .

I have no doubt future governments will tighen things up for sure. But help in retirement has always been there.

Based on your figures, you really do need to double check at the very least about your pension - your pension pot is likely to be in the £100,000's+ territory, which means you will not qualify for governmental support during retirement. You could probably exchange it for an Annuity, which would be a fixed income for the rest of your life - but even that may bump you past the threshold for support, at the expense of loosing £100,000's of ££ for a not very good deal. Often people are much better off drawing their pensions down rather than purchasing an Annuity, plus the remaining money can form part of your estate upon death. A Annuity dies with you.

I actually think your definitely making the wrong decision going down the shared ownership route. Cut your pension down to the minimum 5% (& let stocks and shares grow your existing pension) and that's £360 extra you've found.

In the long run, your mortgage costs will remain fixed whilst rent on the shared ownership will rise to reflect increased house value or inflation - for the sake of a couple of years of budget being tight, before pay-rises reduce the burden of the mortgage payments, isn't 100% Home Ownership worth it? That's your retirement made immeasurably safer and with the growth in equity in your property, odds are high you could afford somewhere larger / more comfortable within a few years.

Good luck either way - but please do double check about your pension. I think assuming your going to get government support is a potentially colossal mistake (if you don't get it, your retirement is going to be a lot poorer than your anticipating due to shared ownership rent).

Hi mate thanks for  your comment. 

The pension i had in my head was come 57 take 25%  and  go part time  and use the pension to fund the difference 
But basically enjoy life  go to places we always wanted to go etc.
Come retirement  you get roughly 80%rent paid for. 

Still unsure what to do, if house prices wernt what they are  i wouldn't of made this post
because i know the right answer.

Buy surely housing benefit is still means tested even in retirement? 

Having savings, additional pension and income for travelling wherever you want probably isn't all that compatible with receiving HB.

You still have a house to maintain and bills, you may feel you don't have many options but planning for benefits in retirement is a poor strategy.