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28 December 2019

shared ownership - where to start?

since sharing my own shared ownership experience online, i've somehow become the unofficial go-to for all those unanswered shared ownership questions - especially since the internet itself doesn't seem to be very helpful on the subject, a fact i had to learn the hard way. being that i still need to ask my mum how to do basic adult tasks, like how to cook christmas dinner (true story), it's a miracle that i made it through my own experience alone, let alone without the help of an adult holding my hand.

so, if you are thinking of looking into buying a home - shared ownership or not, i guess this is my attempt at being the adult holding your hand through what can often be the most terrifying and confusing process.

how much can i borrow?

before you even starrrrrt looking at properties, you want to figure out how much of a mortgage you can afford. i did this through a bog standard online mortgage calculator, and inputted all my financial details. things like: take home salary, monthly outgoings, dependents, holidays, debt and savings all come into play here, so it's best to be as accurate as possible when working out what you could potentially borrow from a lender.

as my deposit was much less than what would be ideal for buying a property solo, my recommended amount to borrow was around £120k. with this figure in mind, i was able to rule out my dream georgian town house in greenwich, and knew i had to refine my dream to something a little more zone 3, and a little more new-build.

which property is right for me?

using the recommended mortgage amount as your maximum, look for properties that fall into the category that you'd ideally want; one bed or two? garden or balcony? bus route or mainline? i had a list as long as my arm of what i wanted (can you believe i wanted a garden and a built in wardrobe, on my budget?!), but after viewing only a few, knew i had to compromise.

i swear by sharetobuy.com for the property search, as this has the most accurate disclosure of costs associated to the property, and you're able to toggle search results based on your max cost per month and also the deposit you have. worth noting that some properties only require a minimum deposit of ~£5k, though i had around £20k thanks to some inheritance and also my help-to-buy isa payout (i got that sweet extra 25% from the government, thanks lads). each property that i wanted to shortlist on this site tells you things like: monthly cost (rent and mortgage, plus any taxes for the property), minimum percentage to be bought, and the minimum deposit required. having this info right in front of me made it so much easier to work out if i could afford it or not - i really rate it.

you are also able to search for properties that are new build or are resales. mine was considered resale even though it had never been owned before, but had previously been rented out by the building association. before i bought it, it had been refitted with new carpet, kitchen and repainted, and was still only less than ten years old. bonus! resales are shared ownership properties where the current owner is looking to sell their share.

how do i register my interest?

in london especially, there are a lot of people vying for the same properties, so don't just "register your interest" by clicking the button on site if you find one you'd like to view, give the agent a call. also worth saying, you'll need to register a lot of interest, as you're not going to get the first property you set your eyes on - you have to kiss a few frogs, i'm afraid. so, don't get your hopes up. but, once you've spoken to one agent, they may be able to suggest similar properties that suit based on your criteria. sometimes they won't. don't lose faith.

you need to apply for your dream property

once you find the place you want, you will need to apply for it. this is basically you throwing you and your financial history into a hat and waiting for the housing association to decide if you're suitable for the building or property. in my case, i applied for two - the first i was one of twelve other applicants, so i didn't think i'd get it, so applied for the second - where i was the only applicant.

typically, i was offered the second one a day before i was offered the first, but ultimately, went with the second. and don't regret a second of it, as the first place was smaller, more expensive, and had less natural light. the fates stepped in there, thankfully! once i was approved and offered the property, i was recommended a mortgage advisor by the property agents - one they work with regularly, one they trust, and one that i too now can recommend to you!

definitely invest in a mortgage advisor!

i had nooo idea what i was doing for most of the journey, but especially when it came to mortgages so a mortgage advisor was necessary for me. i used the guys at arrange my mortgage and they were just the best and talked me through the entire process. and actually, through using them i found out i was actually able to borrow more than i expected, and therefore buy a bigger percentage if i wanted. i didn't, as it turned out because i still wanted to be able to travel and have a life rather than all my disposable income going into my flat, but it was nice to know. my advisor also built some travel money into my budget, which was bloody lovely.

the advisor not only talked me through the entire process and broke down what to expect at every stage, but also was able to give me an idea of costs at each stage too, so there were no shocks along the way. on top of that, they found me a mortgage that not only suited my needs, but also had £1000 cashback for approved borrowers, which was a nice little addition to the furniture fund!

the mortgage advisor also recommended solicitors for me to use for the boring legal bits. the boring legal bits are legally required if you're buying a property - there's just no getting around it. and, from what i understand, there are just no nice and quick ones out there. but, it's got to be a boring job, reading land rights and building plans and financial contracts, so.. cut them some slack. so, if you're not sure if getting an advisor is worth it or not, i say it definitely it. they're not free, but they're worth what you pay for their service. i paid £350 on approval of mortgage, and £0 until that happened.

how long does it take?

lucky for me, i had somewhere to stay while the process was all happening, because there is literally no time frame on this process. for me, it was all completed and i had moved in all in under four months. for some, it's more like six months. for others, more like eight months. i was one of the lucky ones, which i never would have bloody said at the time, but buying a house just has a lot of touch points and people to get involved. so sit back, check in regularly with those who you need to touch base with (namely, keep on top of your solicitor - they're menaces!)

who owns what? 

i took a 25% share of my property, meaning the building association owns the remaining 75% and i pay a reduced rent on that share. all in, i pay less than what i would pay to rent a one-bed flat in this area of london, and i am slowly building up my assets. if i choose to sell, i simply sell on my 25% to another person wanting to get on the property ladder, or sell it back to the building association (that's only if they want to buy it - they get first dibs). i can't sell any less than 25%, but the new owner could buy more if they wanted, i would only collect my 25% of the overall price back. so, say the property value increases, then i take 25% of the profit, too.

i am considered an owner and not a renter, therefore if something inside the flat breaks, it's on me to replace. yep, even though i only own 25%. if something outside the building, on the land or on the facade of the building breaks, then the building association fronts the cost. i do pay a service charge monthly though, so i reckon that probably covers it and the association gets away with murder, but that's a story for another day. for me: it means i don't have to ask permission to do things to the inside of the flat (unless it's like, big re-structural work in which case i need to submit for approval), and i don't have to worry about shit breaking elsewhere cos it's not problem to get it fixed.

are pets allowed?

in my building, probably not, but i can easily get away with day/overnight visitors as there's no concierge or anyone keeping tabs on us as we come and go. it's my flat, so what i do inside it is my business, but the halls are communal and the old "health and safety" rules kick in. i'm also on the third floor, so taking a dog out for a wee first thing in the morning and last thing at night is just the most annoying thing ever. but, that's me. there are definitely pet friendly properties out there, or properties with gardens, so there's definitely options for everyone.

what are the hidden costs?

difficult to answer accurately, but things you will no doubt have to pay for during this process are:

- holding fee/admin ( around £500 when you want the agent to take the property off the market so you can begin the process. this will come off the first month's rent/mortgage)
- mortgage advisor (around £300-£350 on approval of mortgage)
- solictitor's fees (between £1500-£2500 depending on how many things need checking, but this will come out of your deposit, so it's not an "added" fee)
- moving fees (i paid around £100 to move)
- furniture (depends on your taste levels! i furnished mine for ~£2,500)

also worth noting you have to pay these out every time you go through the process, and they're no refundable. so, if your solicitor finds something wrong with the property during the checking stage and you decide to drop the purchase, none of these fees are refundable.

anymore for anymore?

those are all the questions i've had lately, but if there's something else you want to ask and i've not covered it here (that relates specifically to shared ownership), then drop a comment below and i'll update this post as often as i can.

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