Do The Maths
Hi, I was recently asked to help a young designer from Manchester, to get a mortgage. Nothing strange about that, after all, I do that sort of thing all the time.
This guy wanted to get a mortgage for a swanky flat in the centre of Manchester. He was going to enter into one of these shared ownership arrangements, whereby he owned 30% of the property and the developers owned 70% of the property.
Now, this meant that he had to get a mortgage for the value of 30% and then pay rent, at the going rate for the remaining 70%. He saw this of a way of obtaining he dream one bedroom flat valued at £870,000.
No problem on his wages he could easily afford a mortgage for the 30% and he had enough savings for the deposit, in short, he was sorted.
But, I did the maths for him and I realised it was cheaper and better for him to buy his own flat.
Here is what I did, I looked at his income and his outgoings and found he could get a mortgage for £610,000. Plus the monthly repayments would be less than the monthly repayments for the 30% mortgage on the £870,000 house plus the rent.
So I was able to save him money and he owned 100% of his new flat rather than just 30%.
This guy is now in the apartment block next to the one he originally wanted to live in, albeit a few floors lower down. But look at the positive side, if the lift breaks down its fewer steps to climb.
The only downside, if there is one, was the deposit, which was now considerably larger than his first option. But, together we worked out a plan.
So let's talk about how you can own all of your new dream home.