Maybe you're sceptical of the shared ownership scheme shall I shan't I is it
wasted money do I ever own the property in this video
I discuss the most common questions and also the process and how to work out if
you qualify for the scheme let's get to
it whats up Alex Kerr from Mortgage Chain and on
this channel we provide the best tools and tips to first-time buyers if we're
meeting for the first time please consider subscribing let's jump into the
video so what is shared ownership shared ownership is where you purchase a
percentage of a property and rent the remainder from the Housing Association
typically you would buy a share starting at 25 percent 35 and 50 are also common
starting points with the idea of purchasing the remaining shares later on
down the line shared ownership is also commonly used as a stepping stone onto
owning properties outright later on because it is considered better than
renting outright so do I qualify that is the most common question I get also a
lot of people will go to the affordability calculators to see how
much they can borrow without putting in the rent from the Housing Association
and associated service charge cost and annual ground rent so in regards to
affordability I have worked out a calculation which works out in the
majority of cases so let's say you were looking to purchase a shared ownership
property which full value was two hundred thousand pounds now Housing
Association calculations do vary but the majority of the time if you take 12 and
a half percent of the full purchase price that is what your salary pretty
much needs to be to qualify for the affordability so two hundred thousand
your salary would need to be around twenty-five thousand now in some
instances I've seen it work out to as little as ten percent of the full
purchase price so in this instance 20 thousand would qualify and then in other
examples where the Housing Association calculation is more strict occasionally
fifteen percent would be the marker so in this instance 30,000 but generally
speaking twelve and a half percent is a really good and accurate figure to use
at the time of this video another common question how much rent will I pay now
normally if you're looking for properties on Rightmove Zoopla on the
market it will lay out most of the time what the rents the ground rent the
service charges however there are a lot of instances when agents do not put any
of the associated costs onto the advert so what you need to do there is work out
the remaining share so 200,000 let's say you were purchasing 30% which would work
out at 60,000 that means you're renting a hundred and forty thousand from the
Housing Association which is the remaining 70 % now if you take
that one hundred and forty thousand and times that figure by 2.75% you'll find
that equals three thousand eight hundred and fifty pounds divide that by
twelve you're looking at three hundred and
twenty pounds per month or the rent that you would need to pay to the Housing
Association now again sometimes it works out a
little bit higher as high as 3% I've known not really lower than two point
seven five so give you a really good marker if you use three percent over all
that should cover any other costs such as ground rent and service charges so
what is a Housing Association Housing Association is the company which owns
the property and sells you a percentage of the property and will rent you the
remainder it is their responsibility to make sure everything's kept in order and
clean and also provide buildings insurance should anything happen to the
property stair casing this is where you purchase further shares later on down
the line always make sure you are able to
purchase 100% of the share at a later date if the Housing Association does not
permit it do not buy the property as you will find it hard to get a mortgage is
it worth buying a shared ownership property again on previous videos I've
done on YouTube there has been big debates around is shared ownership worth
it's a lot of pros a lot of cons there's mixed opinions here with a lot of
negativity towards housing associations however this is my opinion shared
ownership isn't always a long-term goal it is fantastic for using just as a
stepping stone to get onto the property ladder to then buy your own property
outright later on down the line sometimes shared ownership will provide
you the property you need as a family where beforehand without the scheme you
wouldn't have been able to afford a property what you required for you and
your family you can buy shared ownership property get the mortgage balance down
and then sell it within the near future and use that as your deposit on buying a
property outright you may have salary increases along the way my opinion is
that shared ownership is better than renting outright when these two schemes
are put next to each other because you own a percentage of the property and you
are repaying a mortgage debt which can be used as a deposit for your next
property later on down the line so I have put in the show notes a recap of
the calculations used when understanding affordability and associated costs as
well as a free guide which I've just produced it's a tick list of items that
you must check with the Housing Association when considering shared
ownership make sure to download that and make sure you cover off every item in
the list question of the day does shared ownership provide a stepping stone onto
the property ladder for you let me know in the comments so if you'd like to
understand your shared ownership options whether you can go onto the property
ladder or not and you'd like a free chat with me
just click the link to my diary in the descriptions below and choose a suitable
time and day and select analysis call this is a free no-obligation 10 minute
chat to understand your options please note we are obliged to tell you that
your home may be repossessed if you do not keep up repayments on your mortgage
so thanks for checking out today's video please do check out a show notes for a
recap on today's content and if you're new to this channel please consider
subscribing or ringing the bell until next time
mortgage chain to bringing the best tools and tips to first-time buyers have
a beautiful day and we'll see you in the next one