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11 July 2019

so, you're thinking about shared ownership


over the last few weeks or so, i have seen a huge surge in content being published online around shared ownership, and help to buy schemes in and around london. being that this topic is aligned with some rather big changes in my own life, i sort of thought now's the time to finally put together my own shared ownership experience - in case a first-hand re-telling of what's what helps in ways the excellent and informative posts from the likes of my pals emma and kristabel maybe can't, because they haven't been there themselves as yet.

it's important to reiterate that this is only my experience, that i'm in no way affiliated with any of the schemes, nor am i offering professional advice. at every stage i would recommend speaking to an expert who can answer all your questions in their sleep - all i have for you is one girl's journey into the (not so) scary world of home ownership.

what's the difference between the two schemes?

great question. i had heard of the help-to-buy scheme, but when i looked into it, i realised i was thinking of shared ownership. the difference being that with shared ownership, you are buying into a percentage of a property. in my case, i have purchased 25% of the property, and therefore have reduced my mortgage cost as it's only a mortgage for a quarter of the sale price. the remaining 75% of the property is still owned by the housing association (in my case, l&q), and i pay rent to them on that portion, as well as a service fee for the maintenance of the shared areas in the building (roof, lift, bins, cleaning, etc).

over time, i can opt to "staircase up" which means that i can buy a bigger percentage of my flat, from l&q. you can do this three times as a shared owner, before you have to either buy it out right, or sell the percentage you have to another buyer in order to be able to buy a different property. you can only be a shared owner once, so for me i took the lowest percentage offered - even though i could afford more - in case my circumstances changed in the next few years. if they do, i will staircase up to a bigger percentage when my mortgage is up for renewal.

help-to-buy is another government scheme, whereby you are able to take a 40% (20% outside of london) loan from the government, which combined with your (min) 5% deposit for the property decreased your mortgage repayment to only 55%. as far as i can gather, you can't use both schemes at the same time (so, can't use the 40% loan to be a shared owner), rather you use this scheme if you are truly not able to save a bigger deposit, but are desperate to buy a property and have been approved for a mortgage. in my mind, this is taking one loan from one person (the govt) and another from someone else (the bank), and that's a bit scary. so for me, shared ownership was the right move, as i was able to get a mortgage, and i had a nice deposit to work with.

*worth noting this deposit was a combination of saving hard, an isa with excellent interest, and some inheritance money that was put into a high-interest account for two years while i decided if i was adult enough to buy a house, or if travelling the world was still my plan. i didn't get money from my parents for anything other than furniture! (thanks mum and dad) ** also worth noting that "all" you need to buy a property in london is roughly £4k. honest!

first things first, are you even eligible for it?

as with any government schemes, there is eligibility criteria for both schemes. with shared ownership, you must: be over 18, already either live and work in the area you want to buy in (i was already living in my area), must be a first time buyer, and you can't earn a combined salary of over £90k (in london, or £80k outside). i ticked all those boxes, so filled in an eligibility form online, got the green light, then started the ball rolling!

get your deposit sorted, and then an isa

it might seem obvious, but you can't buy a house without a deposit. the media will have you thinking that if you eat avocados and buy clothes from zara then you will never be able to save for a deposit - they're lying to you. if you have a sensible budget that you can stick to, then saving a minimum of 5% of the purchase price is all you need to get involved with the shared ownership scheme. i also took some second-hand advice from a colleague who had said in passing that her dad had made her set up a help to buy isa as you could earn 25% interest on whatever you saved (up to a limit - a limit i was never going to reach). i did that then and there with the maximum you could open one with (£1200) and paid £200 into it every month. when the time came to cash it out, and with the government bonus interest, i had saved almost £7k in about three years. that was enough to cover furniture, solicitor's fees, and the first month mortgage/rent once it all went through. if you take anything away from this: open up a help to buy isa now!

work out your disposal income

a lot of people don't know what disposable income is. well, it's this simple: what you earn monthly, less what bills you pay monthly, less food and commute monthly, equals disposable income. this is money that can be spent on entertainment, going out, travel, etc, but can also be spent on saving for a house. it's this disposable income that will determine if you can in fact afford a mortgage, and so it might be worth thinking about the amount of takeaways, shopping and extravagant boozy brunches you have, if buying a house is on the horizon. your disposable income should roughly be a third to a quarter of your total income - more is great, any less and i would really look at what my outgoings are.

kiss a lot of frogs

you won't know what you want until you look. i looked at a variety of properties before deciding on the one i bought, including new builds, pre-owned flats, and unoccupied ones. i found all the places i visited on the shared ownership website, as i found it easier to navigate that regular real estate sites, as it shows you minimum deposit, amount for sale, and other specific bits like that. i set up alerts for properties that matched my criteria, then viewed as many as i could. there are also shared ownership events that can be really helpful and informative, but i wasn't able to make any of the days they were on while i was looking. some of the housing associations will offer discounts for properties secured through the events, so they're a great option if you can make them.

funnily enough, the flat i ended up buying was actually the very first flat i ever saw - i liked it then, but in my head i couldn't "love" anything until i'd seen a variety of options. it just so happened that the person who put an offer in on it pulled out during the process, so it went back on the market. that's when i swooped in and put my name in the hat. two days later, it was mine (in principle only, the rest takes a looooong time!). in that time though, i had also put an offer in on another property - which i was also offered, but they took too long to get back to me so i went with my gut in the end, and couldn't be happier.

invest in a mortgage advisor

as soon as i'd accepted the offer from l&q's resales team (my flat was previously a rental through l&q and had never been owned by anyone else!), i took their advice to invest in a mortgage advisor. i used a company called arrange my mortgage who couldn't have been more patient, kind, or happy to answer any and all of my stupid questions every other day. they specialise in shared ownership, so i knew i was in safe hands, and have all the appropriate accreditation, which made it feel totally legit with them. they took me through everything step by step, explained what all the words meant, told me at what point i would need a solicitor, roughly how long each step would take, and liaised with the bank and the solicitor for me, but the best part was the spreadsheet with all my outgoings. it showed me exactly how much i could spend without worrying i wouldn't be able to cover my mortgage repayments, and even built in a "travel buffer" so i wouldn't have to give up my fave hobby. these guys and their services cost me a sweet £350 and it was the easiest cash i've ever handed over - i felt totally at ease, and knew that it was money well spent!

be patient...

the next few months were the longest of my life. all of that up there happened in around february/march time, and i didn't get my keys until three months later - despite the fact my flat had been unoccupied for over a year. it just all takes time. it would be different if there was no-one else in the world, but every little step just takes a lot of time, and it's frustrating, but can't be changed. i read in the papers that the average time between application and completion is close to seven months. the fact mine completed in bang-on three was quite frankly, a miracle. it didn't feel like it at the time, while i was giving notice in my shared flat, and not knowing when i would be moving (i literally found out the day i could move in, that week!) out - thankfully i didn't have to back fill the room, but add that pressure into the mix, and it's all very stressy. i suppose i had it quite lucky, in hindsight..

"solicitors are useless but necessary"

was the advice i was given by a lot of people. genuinely, they're so useless. they have one job: paperwork and they suck at one job: paperwork. trying to get answers out of my solicitor was like carving open a granite rock, and when the answers came, they were wrong. the worst part is, you have to pay them for this experience, or you don't get the property. they literally stand between you and happiness, and are so keen on making the whole process harder than it needs to be. so, don't expect much help here - make sure you get all your answers from your advisor at the start.

exchange and complete

these are two terms you hear bandied about but have no idea what they mean in actuality. to "exchange" is when your solicitor and the seller's solicitor literally exchange the two signed contracts for each to look over. this isn't necessarily the same day you will get your keys, but it can be. usually, completion - when the sale is officially completed and you have paid all your monies to the seller, usually happens in the same week. for me, it happened all on the same day, on one stressful afternoon where my solicitor had told me one thing and the seller's solicitor was saying something else. that particular day was the most stressful of the whole thing. but, at the end of that day, i was the proud owner of a one bedroom flat inside the m25, and with a london postcode. so.. you gotta be in it to win it.

decorate to your heart's content

which brings us to now.. when i spend my weekends building flat pack furniture and painting really badly onto walls that no-one can tell me off for. i'm decorating in a way that makes me happy, that centres me, and makes me feel comfortable as right now, i'm spending a lot of time there. i've earned this quiet time, this space to call my own, and i am actually thriving in this flat. i wake up every day grateful and proud to have this flat, that i did it by myself, that i did something we are constantly told we can't do. so, yeah. that's how i did it.

i'm quite sure i will have missed things out as it was a while ago now, and a bit of a black hole in my life, so if you have any specific questions please let me know in the comments and i will add them in as we go.

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@imbeingerica