Looking into first time buying - what are my options?

Suz239

Hi everyone, I'd appreciate a few pointers here as a total beginner and my situation is a bit uncommon (I think?).

I am on UC and ADP, and I work a part time seasonal job. Due to disability I have never been able to work full time and earn a 'proper' salary, my current job takes most of my energy to sustain and I doubt it's a very secure and longterm position. Sadly I don't have the same options on the labour market as anyone else, but despite that I'd still like to know whether I could realistically aspire to buying one day. Some questions below:

• Would a lender even consider me based on my income situation? Alltogether I probably earn about £25k/year after tax.
• If I'm on low income and UC doesn't allow me to save up above £16k, and payments are drastically reduced before that, would it even make sense for me to be looking into home ownership? Seeing as I'd never be able to save up any meaningful amounts for home improvement / maintenance.. Am I better off just renting?
• I don't have a credit history as I've never gone into debt for anything before. My spending habits are very responsible, I've not had an overdraft and I live well within my means - but this might not be enough when a lender considers my credit score? I'm also looking into replacing my 18yo car, and while I could ask for family support to buy a used car outright, I'm wondering whether it's smart to buy a car on finance to build up a credit history? Or is this a 'myth' and generally not a good idea?

teaselMay

I was able to get a mortgage with Barclays for a shared ownership house last year with just UC and PIP (equivalent to your ADP). It's only small, 50k, I think the limit I could borrow was 56k at that time. One critical thing was including council tax reduction in the calculation, that made a huge difference to what I could borrow and wasn't factored in by the advisor for the shared ownership housing association who told me I couldn't get a mortgage. I do have a credit history, with cards and overdraft facility used over the years, no adverse credit. Once I'd frantically saved a deposit the actual mortgage wasn't an issue, much to my surprise.

You need to think about maintaining the house once it's bought too obviously.

Suz239

https://forums.moneysavingexpert.com/discussion/comment/82120807#Comment_82120807

Thank you, I hadn't heard of shared ownership before!

teaselMay

On UC the rent element of shared ownership is covered by housing allowance. But for the mortgage, or for mine at least, that isn't taken into account, the rent is included as an expense in their affordability calculation but the housing allowance isn't included in your income. Bit odd but it still worked out affordable, just, in their calculations.

Emmia

https://forums.moneysavingexpert.com/discussion/comment/82121113#Comment_82121113

The downside of shared ownership, is that you're responsible for 100% of the maintenance and repair costs, even though you only "own" a smaller percentage - so if the boiler packs up, you need to fix it (or do without heating/hot water).

I'd also be wary as lots of these places are new build, not always of the best quality and are frequently leasehold, so you need to factor service charges and whole building maintenance costs, for works done when the management company wants them done... There are also usually restrictions on who you can sell to, which makes selling up to move for whatever reason tricky, and you may be prohibited from letting the property (as an alternative to selling)

They work for some people, but do carefully consider whether they're right for you before plunging in and buying one.