Share to Buy Expert Sessions: Your questions about affordability

Answering your questions about affordability!

Shared Ownership Affordability

Can I buy a home with Shared Ownership if I am self employed?
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As long as you can show at least three years of self-employed accounts, and providing your income is sufficient, you should be able to obtain a mortgage. If your income varies from year to year, you should seek independent financial advice about suitable mortgages and about managing the ongoing costs of home ownership.

Am I totally excluded if I'm very slightly below the recommended minimum income on a property I'm interested in?
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Response from Clarion Housing – Not necessarily, we’d take into account your deposit too. Typically, the higher the deposit the less the income can be.

I can afford the home but have a poor credit history because of a past instance which was not my fault. Can I still buy?
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In order to be eligible to buy a home, you will need to be able to take out a mortgage. If your credit history stops you from doing this, then you will not be able to proceed. Before renting a property to you, housing associations will run a credit check. In some cases they will not allow you to rent the property if you have bad credit, so it is worth asking them about their policy before you view the property.

I have loans, a credit card and overdraft. Will I still be able to buy through Shared Ownership?
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Response from Censeo Financial – It will depend on the size of those loans and credit cards, because they will come into play in terms of working out affordability. However, it will not completely rule you out.

Can family members help with affordability?
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The only way that family members can really assist is by gifting money towards the deposit. In terms of family members acting as a guarantor to allow you to access a larger loan, virtually no lenders will currently accept guarantors for mortgage loans.

I've been assessed and approved but am being asked for 10% deposit, rather than the 5% I expected. Why is this the case?
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Response from Clarion Housing – This depends on your individual circumstances – for example, if you’re in temporary work, have visa restrictions, have a lot of financial commitments or have a poor credit history .

What is the general rule of thumb when it comes to affordability? Is it measured differently between each housing association and mortgage provider?
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Response from Clarion Housing – It’s 45% of your net income that should be spent on rent, service charge and mortgage payments. Shared Ownership affordability guidelines can vary from lenders requirements.

I've heard some Shared Ownership properties don't allow for lease extensions if the owner hasn't bought 100%. Does this have any impact on the property value or how banks see them?
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Response from Clarion Housing – New Shared Ownership homes have 125 year leases typically. Mortgage lenders are okay with leases above 80 years in most instances so there may be no need to think about a lease extension until you’ve reached 99 years at least.

Find out more about leasehold homes here.