Updated: 4 days ago
WTF IS THIS BLOG ABOUT!?
Considering Shared Ownership but wanna hear from someone that's done it first? Well, you're in luck!
In this blog, my mate Jess shares her experience of buying a house through Shared Ownership with her partner Luke.
I'm super excited to be joined by my mate Jess and her partner Luke for this blog to talk about their experience of Shared Ownership. I've known Jess since primary school AKA a longgg time - so it's so lovely to see her all grown up and living an an actual house 😲 (I live in London so houses seem so adult to me)!
Jess and Luke are both 25 and have been together for just under three years. Jess works for a charity that supports elderly and vulnerable people within her local community and Luke is a water treatment engineer (whatever that means?!).
After being together for about a year, they discussed moving out of their parents' homes and into a rented house, but then decided they'd rather stay at home for a bit longer and continue to save until they could afford to buy a place of their own. The main driver of this was so that they had the freedom to decorate and make the place a home. Plus, they wanted a dog #priorities!
So now you know a bit about Jess and Luke and why they decided to go down the Shared Ownership route, let's get into the juicy stuff...
CAN YOU TELL US A LITTLE BIT ABOUT THE PROPERTY YOU BOUGHT AND HOW MUCH IT COSTS?
We bought a 3 bed semi-detached new build house which was £330,000 in total. We have a 40% share at £132,000 and pay rent on the other 60%. To buy the house, we put down a 5% deposit (£6,600) as well as a £500 holding fee to the developers to cover the rental part.
Unfortunately, due to a combination of our relatively small deposit and the pandemic, we didn't have too much choice over lenders, so we only had two mortgage providers to choose from.
In terms of ongoing costs, we pay £550 a month for our mortgage and £450 for rent. Our mortgage repayment actually turned out to be more than double this for the first month, which was a bit of a shock! But we made sure we had more than enough saved to pay for these sorts of unexpected things.
HOW DID YOU SAVE FOR YOUR DEPOSIT?
We both opened a Help to Buy ISA to help us save for a deposit whilst getting the 25% government bonus. Unfortunately, we didn't end up getting the bonus because in order to qualify, you need to use the money to buy your first home worth less than £250,000 and, for Shared Ownership, this limit refers to the value of total property rather than just your share, which we didn't realise! (FYI Help to Buy ISAs no longer exist, but you can open a Lifetime ISA instead, which has a limit of £450,000).
We were able to save pretty quickly when we put our minds to do - lockdown definitely helped since we couldn't go out anyway! We met with a mortgage advisor pretty early on in the process who helped set out a plan and a goal for how much we needed to save. We found this really helpful because it gave us something to work towards. I (Jess) didn't even have £20 in my savings back then and less than a year later we were getting quotes for a mortgage!
WHY DID YOU DECIDE TO GO DOWN THE SHARED OWNERSHIP ROUTE?
To be honest, it just seemed like the best option for us - it would have taken ages to save for a huge deposit, so shared ownership was the quickest way. We also considered Help to Buy, but even that required quite a big deposit.
One thing I would say about shared ownership though is that I don't think it's worth doing if you're only buying a small share (i.e. less than 25%) because even though the deposit and mortgage repayments will be lower, it will be much harder to eventually own 100% of the home because each time you buy more shares, you basically have to go through the whole mortgage process again. Plus, when you buy new shares (i.e. 'staircasing'), they're priced at the value of the house at the time of staircasing, not the value of the property at the time you bought it.
WHAT WAS THE PROCESS?
To be honest, the process was pretty tedious, but that's to be expected! First, you need to get a Help to Buy number from the Gov website. Then, you need to look for homes in your area. We found that, where we live, there were loads of Help to Buy properties, but the Shared Ownership ones seemed to be snapped up before we even got a chance to look at them! We used to look on the Shared Ownership website everyday, it can be disappointing when they go so quickly, but hang in there!
We were able to book a viewing for the place we're in now a few weeks after registering. We didn't think they'd have any left, but luckily they did! We were pretty sceptical when we went to look around because we weren't familiar with the area, and I (Jess) was particularly wary of moving so far away from home - I say far, it's only 30 minutes but that's far enough for me!
So we ended up falling in love with the place after looking around, it turns out the whole estate was Shared Ownership, which is probably why there were some houses left!
We viewed the house on the Saturday and applied for the property that night. By Tuesday we had been contacted by the developers to say we'd been accepted, which we were not expecting at all really! We paid the holding fee of £500 that day. We informed our mortgage advisor that we had chosen a property so that he could run the numbers and secure a lender. This was in December.
Then came the paperwork... this was the worst part! There was a lot of it because not only did we need to complete documents for the mortgage application, but there were financial checks on the rental part too.
We chose the solicitor the housing developer recommended since we knew they were familiar with Shared Ownership. Plus, our mortgage advisor told us that if a solicitor is very cheap, then it's probably too good to be true and that a good solicitor is usually somewhere between £1,200-£1,400.
Things started to quieten down a bit around Christmas, but then in February we were issued our memorandum of sale and our solicitor got in contact to say everything had been sorted and we moved in the following week. It was all a bit of a whirlwind!
WHAT PART DID YOU HATE THE MOST?!
Definitely the paperwork and all the waiting around! Plus, setting up all the utilities when we moved in was a pain, but I think that's normal regardless.
WHAT PART WAS YOUR FAVE?!
The best part was obviously getting the keys, although it really didn't feel real until that evening when we were sat on our own eating Dominos pizza on the floor lol! That's when it finally sank in we had finally done it.
WHAT WAS YOUR BIGGEST LESSON?
Definitely the Help to Buy ISA limit - had we have known we would have transferred it to a Lifetime ISA where the limit was higher.
ANY FUNNY STORIES?
We found a housing estate that was in the middle of being built and the homes were absolutely beautiful. We booked a viewing but it wasn't for a while, so we asked whether we could walk around what had already been built. Well, I love looking around houses and this one particular house was huge - and well out of our price range! - and the garden gate happened to be open so I snuck round and pressed my face up against all the windows to get a good look. Luke had to drag me out as we definitely couldn't afford it lol. Don't worry, no one was living there at the time - I hope!
WHAT'S YOUR BIGGEST TIP FOR OTHER FIRST TIME BUYERS CONSIDERING SHARED OWNERSHIP?
We have three:
1. I know it's difficult, but try not to get caught up in all the excitement. We ended up very disappointed at times when we saw a nice house and then it didn't work out for some reason. So try to keep an open mind and don't be afraid to look around in different areas as you may be surprised what you find!
2. Make sure you use a solicitor who has experience in Shared Ownership homes.
3. Go with a recommended mortgage advisor.
Shared Ownership can be a little daunting, but hopefully hearing Jess and Luke's story has provided some reassurance! If you want to know more about the pros and cons of Shared Ownership, read this blog.
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Now for the serious part: my blogs are for educational purposes only - speak to an independent financial advisor for information on your specific circumstances. And remember, investments can go down as well as up.