Shared Ownership, buy more shares or not?

cleg · 21 January 2019 at 7:07PM

Hi all. I currently own 40% of my house and have £49,000 left owing on my mortgage at a rate of 1.84% which i currently won't pay off until i'm 70 yrs old. The only way i would ever be able to buy 100% is if i inherit my fathers property and to be honest i would sell this house and buy somewhere else anyway, but playing devils advocate, if i didn't inherit the house what would i do at 70 yrs old with rent to pay on the remaining 60% i do not own?

I have recently become debt free, so i am considering some options which i could do with help on.

A) should i buy more shares in this house whilst i am of working age and able to pay off a mortgage?

overpay my existing mortgage so it ends sooner?
C) think about putting my recent available income into savings even though they are at shocking rates?

The longer i leave this decision the more worried i get about ending up retired with rent to pay (assuming i live until retirement age, current age 38.). Really stuck on which way to go as i think either option will leave me too old to buy the property fully without any inheritance money :0(

Thanks in advance.

cjv · 21 January 2019 at 7:14PM

You also have the option to sell your shared ownership property at any time and use the proceeds to buy on the open market, is that viable?

cleg · 21 January 2019 at 7:20PM

My equity is about £19,000 so with the mortgage i would be given on my wages i wouldn't be able to afford another house or flat outright anywhere locally.

cjv · 21 January 2019 at 7:30PM

I think all 3 of the options you mentioned are sensible, you could even do a combination of 2 or even all 3.

You may also change jobs, career, relationship status, get a pay rise etc in the future which will give you more options.

cleg · 21 January 2019 at 8:05PM

True, i just didn't want to leave things as is, as time flies by so fast and i didn't get on the housing ladder until 35. Maybe i will overpay my mortgage for now whilst i am deciding.........

cjv · 21 January 2019 at 8:12PM

I am in the process of getting on the ladder too, buying 40% of a shared ownership flat and I am nearly 38! I have also had a million different ideas of how things might or might not work out, so I know how you feel.

I am still to make up my mind to overpay my mortgage or save instead, I am leaning towards saving as the funds will also be there for a rainy day.

I settled on the idea that the property will be a stepping stone to a future property, but will also leave the door open to staircase if I ever am in a position financially to do so. My partner may be moving in somewhere down the line which will bring additional household income.

You never know what the future holds!

dimbo61 · 21 January 2019 at 9:52PM

Time to get Real MSE !
How much would it cost you to buy the other 60%?
Could you get a mortgage to buy the rest of the property ? What LTV would that be with your equity ?
How much would the new mortgage cost each month ? Can you afford that.
Why not Overpay say £300 each month while also putting £300 a month into a 5% regular saver ( Nationwide comes to mind ) for a year.
See how you manage for a year.
Now you might be saying is this poster MAD how am I going to manage my normal mortgage payment and other bills and Save £500/600 a month.
Well if you want to buy the other 60% your new mortgage will be £5/600 a month more.

cleg · 23 January 2019 at 9:38PM

I would never be able to buy the other 60% which is why I'm wondering what to do for the best now. I certainly don't have £600 available each month, although I could save some money & also overpay my current mortgage.

Unicorn_cottage · 24 January 2019 at 8:32AM

What is your job situation? Any chance to move up the ladder and get a wage that would command a better mortgage offer?

cleg · 27 January 2019 at 3:32PM

I'm just an Administrator so my wages are very much capped, I'd say I'm already getting top whack pay wise, & retraining for another career I've looked into before but always involves so much college time I'd couldn't work full time & I need to work full time.

haras_nosirrah · 27 January 2019 at 4:54PM

I am an advisor who specialises in shared ownership and has done for 10 years.

My advice would be if you aren't going to get to 100% don't go above 60 and only do that if you are going to be there for a minimum of 5 years.

When you sell you sell your share to someone else. If you own 80% you have to find someone who can afford to buy that from you and still qualifies for shared ownership or sell it on the open market and then you lose the niche or the property (lower deposit, lower stamp duty etc)

Personally I would overpay and then either staircase to 100% later if you can or look to sell your 40% and move to the open market.

Shared Ownership, buy more shares or not?

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