How I Bought A House: A Shared Ownership Story
It is no secret that getting on the property ladder is harder than ever right now, especially on your own and in your 20s but that’s exactly what I did, and here’s how I did it. In 2018 I’d been in my first proper job since University for about a year, I’d had a long term relationship end and was at a loss as to how I would manage to buy a house on my own but I was determined to make it happen. I learnt a lot throughout 2017/2018, and it had made me very self-reliant and independent. I wanted that to continue and to move out of my parents. I was extremely fortunate that my mum allowed me to save money rather than pay rent I set out building up a deposit while I explored my options.
I’ve never been known to be a patient person and I certainly wasn’t this time either. I started scouring a range of property websites with a focus on not moving too far away from my family but also looking at what I could afford. I did a couple of house viewings of places I could afford but just couldn’t see myself living there. I needed to decide whether I’d wait it out for longer until I could afford a house I wanted or whether to purchase an older house, however I then came across Shared Ownership.
What is Shared Ownership?*
Shared Ownership is a term used to describe buying a share in a home and paying the remainder via a rent to an agency or housing association. It is an affordable option meaning you do not need a huge deposit to get on the property ladder. You typically purchase between a 40 – 70% share but this can be as low as 25% - you complete an affordability check and then get a mortgage for the percentage share you want to buy. When and if you’re ready to, you can later take up an option called staircasing to buy the remainder of the share once it is financially savvy for you to do so.
I saw an estate just over a mile away from my family and in an area I knew quite well, with these gorgeous new build properties and completely fell in love. I had looked at new builds and they seemed totally out of my price bracket so seeing these ones on Shared Ownership and within budget, I was elated. The houses were big and spacious, with a big garden space, shed, fences for privacy and patio doors that open out into the garden. The buildings had so much natural light with floor to ceiling bedroom windows, I just knew I wanted it.
I went for a viewing with my mum to their show home and saw the potential the home could have so started the mortgage application process.
To be eligible for Shared Ownership there are a few factors such as having a household income of under £80k (£90k in London) and not currently owning a home. It is a scheme created to help people get onto the property ladder so obviously the caps are there to make sure the right people are securing the homes, predominantly first-time buyers. Going into this process I didn’t have a clue where to start so I used a mortgage broker to help me find the best mortgage deal for my situation as I didn’t have credit as such. I did not have negative credit but just did not really have enough of a profile for a ‘big bank’ to lend to me because I could not demonstrate that I would be reliable to pay back. They were incredibly helpful, and I managed to pick a fixed term mortgage with a building society.
What Next?
While making the mortgage application I’d also enlisted a solicitor to do all the paperwork, these are specialist property experts and I’d recommend picking one who specialises in Shared Ownership for peace of mind that they know exactly what they’re doing.
A lot of the process goes on in the background at this point.Your broker/mortgage provider and solicitor will complete the paperwork and run searches on the property you are buying. This all comes at a fee but has to be done to make sure when you have your deposit, you have an additional pot for any fees you incur – I’d suggest around £2,000 to cover fees – mine came under this and having a little remaining in my account meant I already had a little for décor and interiors.
Is there anything I can do right now?
If you’re just starting to think about buying a new home, there are a few steps and tips you can implement right now – these will stand you in good stead when you’re in a position to buy and are tips I wish I knew before buying.
- Get a credit card – Seems crazy right? I am not saying go on a crazy spending spree but get a credit card and make a purchase each month, pay it off in full every single month. This helps you build your credit score so that when you reach a point you want to buy; more mortgage providers will be available because you have already demonstrated you’re reliable at making payments.
- Look into government schemes – I was fortunate enough to have a Help to Buy ISA which really helped with my solicitor’s fees. It was a scheme where I could save money each month and the government gave 25% on top of what I’d saved. Unfortunately, this scheme has now ended but there are lots of other government mortgage schemes you can take a look at and see if they would be suitable.
- Clean up your finances – The closer you get to wanting to buy, the cleaner your finances and transactions should look. The mortgage provider and solicitor will need documents of your finances to prove you have the deposit money, payslips to prove you have a source of income to make bills and depending on the mortgage provider, bank statements may be needed for the last few months. Have a think about what you are spending money on, regular payments to betting companies for example is not what mortgage providers want to see. Different payslips from various jobs suggests you do not stay in one place. Your aim is to reduce any red flags that could arise. Save any big purchases, and try and stay in one job for several months to help with this.
- Save, save, save – Buying a house is expensive, and incredibly hard to budget for to begin with. You obviously need to save a deposit to be able to start the process, but you also need to save money for solicitor’s fees, furniture, décor, bills, insurance, emergencies etc. etc. There’s no such thing as an upper limit to saving when you’re buying a house, and I’d recommend always having an emergency fund too in case of unexpected expenses such as needing a plumber, an electrician or the boiler breaking. Start saving now, use a budget planner and make a conscious effort to put money away every month and think about how you can make savings now. It is hard to live like you are already paying the bills, but you’ll be thankful in the long run when you’ve got enough saved.
- Do not expect everything all at once – If you are buying a house on Shared Ownership chances are, you’re not flush with cash, this won’t change once you’re in the home either so be sensible with purchases. For the first month or so in my new home I spent most of the time in my bedroom. I took the bed with me from my parents’ home and did not have a sofa yet. Making do for a month meant I could buy the sofa I wanted, and it was a big expense, but I still love it now. Buy staple pieces, accept help from family and friends – you would be surprised what kind of furniture and interiors they have laying around that they do not use. I am three years in now and I love my home, but it is only now I am thinking about decorating to get it exactly how I want.
These days, the options out there are growing greatly, with strong Shared Ownership offerings across the country. Housing associations like Aster Group have strong initiatives for those of you who are looking to move out of the renting circuit in London, there are some fantastic properties available in many of the commuter belt areas and they may just be the answer to your home-buying goals. Shared Ownership was a lifeline for me, it allowed me to complete a huge milestone in my life, on my own and earlier than I ever thought I could (I was 24 at the time). I’m now in a position where I’m due to be married to my forever boy so we’ll staircase the home after that and own it together. Without Shared Ownership I would have struggled making that first step.
What advice would you give to a first-time buyer?
