Are you looking to buy a shared ownership property? Shared ownership and affordable home schemes can act as a great stepping stone to owning a home; you’ll usually own between 25% and 75% of a property and pay rent on the rest, without the need for a huge a deposit.
The overall payments can work out less than renting a property in the private sector, and you have the opportunity to live in a home you wouldn’t otherwise be able to afford. But if you do take up the opportunity to join a first-time buyers or help to buy scheme, what’s the best way to balance your rent and mortgage payments?
Here we’ve put together a few tips on how best to go about it.
Know your mortgage
When planning your rent and mortgage payments, it’s important that you fully understand your mortgage and any variations there may be in payments over the coming months or years. Is it a fixed rate or variable rate mortgage for instance? Could there be any variations to the monthly instalments that you pay and could you afford them?
Are there any financial penalties you could face and in what circumstances? If you don’t keep up your mortgage or rental payments, you could risk losing your home, so it’s important that you are fully aware of the conditions and payments attached to your particular mortgage.
If you’re contemplating applying for a shared ownership scheme, then contact help to buy Barnsley about the best option for you. They’re experienced mortgage advisers who can guide you through the process and find the most suitable mortgage solution for you.
Understand your property
Another key factor in balancing your bills is to understand your property and what you may do with it. Most shared ownership schemes prohibit the subleasing of a property for instance, but you may be able to take in a lodger to help pay your bills.
It may also be that you can’t make any structural changes to the property. It’s important before you begin, that you understand the limitations on your property and what you can do with it, so you understand how you may make it work for you (or not), as the case may be.
Know your bills
In addition to your mortgage, it’s important that you fully understand all of the bills that you’ll be responsible for when you’ve bought a property through a shared ownership scheme. In addition to the mortgage payments, you may well become responsible for bills that you haven’t had before, like maintenance, service charges or ground rent.
When it comes to maintenance charges, you need to be aware of whether you are simply responsible for general caretaking and maintenance or whether you’ll have to foot the bills for more costly and significant maintenance work. So ensure you are aware of the full gamut of bills for which you’ll be responsible and how much they are likely to be before you enter into any agreement. Be prepared for your bills, including your rent, to rise in the future.
Draw up a budget
When organising your rent and mortgage payments it helps to draw up a realistic budget of your monthly expenses, so you know what your financial commitments are and what disposal income you have.
The Citizens Advice Bureau has a great budgeting tool for working out your financial commitments, in the shape of an online form that will take you about 30 minutes to fill in.
Before you begin, you’ll need to gather together key paperwork such as your payslips, bank statements, credit card bills and receipts for any other regular bills or expenses that you pay for in cash. The more realistic and accurate you are in filling in your responses, the more the tool can help you in organising your finances for the future.
Save as much as you can
In addition, save as much as you can, so you have a little rainy day money should you face an unexpected bill or circumstance.
So there you have a few factors you need to keep in mind when approaching your rent and mortgage payments and how best to approach balancing them effectively.