Catch 22- Shared ownership- confused millenial ! Rejected by HA for earning to much but below 90,000

I am a mortgage advisor who specialises in shared ownership and has done for 10 yrs. I also do financial assessments for a london housing association. This is how we do it based on the housing association I assess for - others may be slightly different but I would expect them all to be similar.

With housing associations the criteria normally goes
live and work in area
people with children
couples
singles

in terms of the affordability it would be that the maximum is 45% of their net salary (after deductions for loans, pensions, credit cards, maintenance etc) and more than 35% of their net pay. It has to be between these two parameters.

If under 35% then you are 'too affordable' and the scheme is designed for people who cannot afford to get onto the open market rather than those who want cheap housing. They would be expected to buy more and if they can afford over 75% would not get the property.

over 45% would be outside affordability

We base the mortgages at a rate of 5% to account for rate increases (and because we find this roughly matches the lenders affordability)

It is possible the others lived closer, there were two of them, rather than it just being on the affordability.

mmlady12 wrote: »

Sigh


I am not being a drama queen about the situation or complaining at how unfair life is. I am just a bit annoyed and was complaining that I fall into a grey area of millennials who have worked super hard to get to a good stage and earn a good amount a year.. but certain schemes are not accessible to me .. despite shared ownership eligibility criteria being 90,000 on the government website.


and yes the other candidates probably earn 46,000 - 48,000 making them eligible
=
HTB is an option..but when I did the calculations.. I would be spending around 1800-1900


e.g on average new 2 beds in north London go for 450,000.


1. I try to by 80% that's £360,000
2. Equity loan £90,000
3. Mortgage ££337,500 (after deposit has been removed)
4. on a 4.8% interest that's around 1900 a month
leaving me with 600 on bills/council tax and other expenditure. which I might be able to manage just about


It is hard for young single people.. I am not trying to be a spoilt millennial.but a lot of my peers are struggling.. these schemes wither work if you are a low earner or you have a partner and have a joint income..


I have none of those at the moment.. single as hell!!!

I have done a quote for your help to buy property
450k with the equity loan and a mortgage of £337,500

on a 2 yr fix you would be looking at £1056 a month, on a 5 yr you would be looking at £1121

I can't comment on affordability due to not seeing payslips and bank statements but just to let you know that you aren't looking at anywhere near £1900 a month. I have based the above on a 35 yr mortgage

You are well within the SO criteria, it's just on this specific occasion there were applicants, better matching the HA criteria.

People with lower income, are able to save less, making it harder to get a higher deposit and/or mortgage - this is why they have priority for SO.

Re HTB, your calculations are wrong and you can get 2bed with HTB for less than 350k in decent area. For example:

https://www.rightmove.co.uk/new-homes-for-sale/property-74468687.html

For 320k with HTB an 5% deposit the math is:

Deposit: 16k
Equity loan: 128k
Mortgage: 176k (well within your affordability)

Monthly:

Mortgage: ~750
Service charge+ground rent: ~250
Total: £1000

After 5 years if you can't afford or doesn't want to repay the equity loan, or pay the interests on it - just sell.

There.

The HTB calculator is assuming 4.8% rate on the mortgage which is ridiculous for the next several years. also you don't have to repay the loan out of your poket - just sell it and move on with the build up equity in the last 5 years.

I have mentioned this before - just ignore the equity loan and just act as if you bought a 192k (using my above example) property that was upgraded to 320k property for free for 5 years. Sure at the end of the 5 years you won't benefit from potential price rise on 40% of the equity, but who cares.