If you’re hoping to buy the home of your dreams, it’s definitely worth considering Shared Ownership, says TMP The Mortgage People’s Kelly McCabe.
While some might think that Shared Ownership is all about one-bedroom flats in the far-flung corners of housing developments, that’s not the case at all. It’s actually a flexible, affordable and accessible way of buying a home and there are some amazing properties out there – right up to four-bedroom homes – in vibrant, friendly communities.
The way it works is that you buy part of the house (between a quarter and three quarters of the value) and then rent the rest of it from a Housing Association at a subsidised rate. Your overall monthly payments are cheaper than if you were paying for it all through a mortgage and when (or if) you’re ready, you can buy more shares so that eventually, if you like, you can become the outright owner.
It’s not just for first-time buyers, either. Shared Ownership reflects our shifting society and is for all sorts of people from families looking to grow to ‘empty nesters’, ‘downsizers’ and everyone in-between.
The beauty of it is that nothing is forced upon you; you are welcome to pay off what you owe in larger chunks as you go or increase the size of your mortgage share. But it’s also perfectly OK to stick with the share that you originally bought and just keep on paying that off monthly.
Plus, the Housing Associations that you’ll be paying rent to aren’t like traditional landlords. You won’t have someone looking over your shoulder all the time; these are supportive, community-based organisations that can offer advice and useful resources. In fact, if you ever get into trouble with your rent payments, they have dedicated teams who can look at your situation and help you get back on track.
What’s the catch?
If you’re thinking ‘that all sounds great, but I bet it’s a nightmare applying for a mortgage’, the good news is that it couldn’t be easier; lots of lenders big and small now offer mortgages on Shared Ownership homes. And some mortgage brokers (ahem: TMP The Mortgage People) look after nothing else!
Your first step is to sit down and work out what you can afford. It would be easy for me to suggest that you should go and speak to a mortgage adviser and get them to go through your finances, but it’s better to work out what you’re comfortable with first. Remember: just because a bank or building society says that you can afford a certain amount, it doesn’t mean that you can.
Analyse what you’re spending each month and work out where you could make savings – without compromising your quality of life too much. It’s all very well claiming that you can do without occasional trips to the pub or holidays, but these are often the things that make life worth living.
Another tip is to download the Mortgage Ready app (you’ll find it on iTunes and Google Play), which is tailor-made for Shared Ownership and features a unique calculator that will tell you how far away you are from owning your own home. You never know, that dream property might be closer than you think!
The above editorial is not intended as legal advice. TMP The Mortgage People is authorised and regulated by the Financial Conduct Authority.