Budgeting for Your Family’s Future: Financial Planning for Shared Ownership in West London

20 November 2023

Saving for Your Share Deposit

The first budgeting priority is saving up for your deposit to purchase your initial share in the property. The minimum share you can purchase is 25%, and this will determine the deposit amount needed.

For a £400,000 property, a 25% share would be £100,000. With a 10% deposit, you’d need £10,000 saved.
For a £600,000 property, a 25% share would be £150,000. With a 10% deposit, you’d need £15,000 saved.

The share you can afford will depend on your deposit savings and income. Here are some tips for building your share deposit:

Open a dedicated savings account – Open a high-interest savings account specifically for your deposit savings. Set up automatic monthly transfers into this account to steadily build savings.
Cut discretionary spending – Review your budget and look for areas to trim spending, even temporarily, like dining out, entertainment, holidays, or shopping.
Earn extra income – Consider taking on a side hustle like tutoring, freelance work or participating in user testing to earn extra cash for savings.
Use windfalls wisely – Put any windfalls like tax refunds, work bonuses or gift money towards your deposit savings.
Get help from family – If possible, family members may be able to contribute to your deposit fund as a gift.
Use government schemes – First-time buyer schemes like Help to Buy: Equity Loan can help supplement your deposit savings.

By consistently saving, earning extra, and using schemes or help where possible, you can build up your share deposit fund. Timeframes can range from 1-5 years depending on your financial situation. Consult a mortgage advisor to determine an appropriate deposit target and timeline for your circumstances.

Understanding Ongoing Costs

Beyond your deposit, you’ll need to budget for ongoing costs that come with shared ownership. These include:

Rent – You’ll pay rent to the housing association on the share you don’t own. Rent is typically 1-3% of the property’s full market value. On a £600,000 home, rent on a 25% share could be £9,000-£18,000 annually. Rent increases yearly so budget for higher costs over time.

Mortgage – Your mortgage payments will be based on the share you own. With a 25% share of £150,000, your mortgage costs may be £500-£800 monthly. Get mortgage pre-approvals so you know your rate/payments.

Service charge – This covers maintenance and repairs for shared areas of the property. Budget £100-£300 monthly for service charges.

Home maintenance – You’re responsible for repairs in your owned share. Budget for infrequent costs like boiler servicing or roof repairs.Aim for £50-£100 monthly in a maintenance fund.

Buildings insurance – Required to cover the building’s structure. This is arranged by the housing association for around £15-£30 monthly.

Factor in all of these ongoing costs as you determine an affordable share size and property. Ongoing costs will take a big chunk of your monthly budget so it’s critical to plan for them.

Planning for Staircasing

With shared ownership, you have the option to “staircase” and purchase additional shares as your financial situation allows, working towards owning 100% eventually. This requires additional budgeting.

Here are key points to consider for staircasing:

Timeframe – Staircasing tends to happen over 5-10 years. Don’t plan to buy your maximum share immediately. Give yourself financial breathing room.
Costs – Each share will require an additional deposit and increase your mortgage. Make sure you have savings available.
Equity – As you pay rent and mortgage payments, you build equity which can help fund buying additional shares.
Income changes – Only staircase when your income can support increased mortgage payments and costs.
Priorities – Balance staircasing with other financial goals like schooling. Don’t overextend your budget.

Use the first few years in your share to pay down debts, build savings, and stabilise financially for future staircasing. Consult your mortgage advisor regularly to review when you can afford to buy additional shares. With gradual, planned staircasing, you can steadily work towards full ownership.

Budgeting for Maintenance and Repairs

As a leasehold homeowner, you’ll be responsible for maintenance and repairs related to your owned share of the property. These inevitable costs need to be accounted for in your family’s budget:

Annual check-ups – Budget for annual inspections and servicing for your boiler, heating system, alarm system, etc. Estimate £200-£400.
Minor repairs – Small repairs like appliance issues, broken fixtures, tile damage can cost £100-£500 as needed.
Major repairs – Big repairs like roof, boiler or electrical repairs can be £2,000-£5,000. Save in advance for these.
Improvements – Upgrades like kitchen remodels or extensions can cost tens of thousands. Consider carefully before taking on.
Emergency fund – Have at least £2,000-£5,000 available for urgent repairs between annual savings.

To prepare for responsibilities that come with your share:

Inspect the property carefully before purchasing to avoid surprises.
Request records of recent repairs from the seller/housing association.
Have a Property Survey done to identify risks needing repair.
Build regular savings for maintenance – aim for 1-2% of your share’s value annually into savings.
Research reliable contractors for emergencies and get quotes for projected bigger repairs.
Insure your share appropriately including buildings, contents, and liability insurance.

Proper home maintenance is essential to look after your investment and avoid serious issues. Adjust and grow your repair savings fund as needed once you see the actual costs in your first years of ownership.

Thoughts on Budgeting for Shared Ownership

Purchasing a shared ownership home is an incredible milestone that can set your family up for long-term financial security. But the journey requires diligent preparation and budgeting to buy the right share size and properly plan for ongoing costs.

The keys are to save steadily for your deposit, understand all fees you’ll be responsible for, staircase gradually as your budget allows, and proactively save for maintenance needs. By consulting experts like mortgage advisors and following savvy budgeting strategies, shared ownership can fit comfortably within your family’s budget, both now and in the years ahead.

Finding the Right Location in West London

When looking to purchase a shared ownership home in West London, choosing the right location is key. Consider factors like:

Commuting/Transport – Ensure the property has easy access to tube stations, train lines, and key roadways. Prioritise locations near your workplace.

School Catchment Areas – Research the best state schools and their catchment areas. Locate near top choices for current or future enrollment.

Amenities – Look for areas with useful amenities like shops, parks, recreational facilities that suit your family’s lifestyle.

Support Systems – If possible, stay close to any family or friends who can provide childcare support.

Safety – Review crime rates and statistics to avoid high crime areas. Visit locations at night to gauge safety.

Future Goals – Buy in an area that will support resale value and future staircasing plans.

Drive around your preferred locations to help narrow your search. Set up Rightmove alerts for affordable listings and go view properties in your target areas. Location will impact your everyday life, so dedicate time to finding the right neighbourhood.

Setting a Shared Ownership Budget

To determine how much you can afford for shared ownership:

Calculate total monthly income after tax – Include income from employment, benefits, pensions, and any other stable sources. Be realistic about future job/income security.

Estimate monthly outgoings – Tally all your normal living costs like bills, food, transportation, school expenses, debt payments, entertainment, etc. Use bank statements to get accurate figures.

Factor in new housing costs – Estimate the additional costs for rent, mortgage, service charges, insurance etc. Get professional advice on likely costs.

Set savings goals – Decide minimums you want to save each month for retirement, staircasing, repairs, holidays, etc.

See what remains – After accounting for all existing and new costs, set your remainder amount as your maximum for monthly housing payments.

Stick to your budget limit, even if approved for higher mortgages. Interest rates and costs will rise over time so build in financial breathing room. Re-evaluate your budget regularly and before staircasing.

Choosing Your Share Size

With your budget set, you can zero in on an appropriate share size:

Match payments to your budget – Only consider properties and share sizes where the monthly costs fit within your budget limit.

Weigh deposit savings – Make sure your deposit savings cover the minimum for the share size, usually 10%.

Think beyond monthly costs – Keep in mind one-time fees like moving, furniture, redecorating.

Account for interest rates – Get pre-approvals at different interest rates in case rates increase.

Discuss with lenders – They can provide guidance on prudent share sizes and mortgages given your financials.

Leave room to staircase – Don’t buy your maximum share immediately. Buy lower to start.

Be conservative – Don’t overstretch your budget. Opt for a smaller share if you have any doubts.

Buying too large an initial share can strain your family’s budget and leave you cash strapped. But a more modest first share gets you on the ladder, with room to staircase up over time.

Preparing Financially Beyond Your Deposit

To set your family up for shared ownership success:

Pay down debt – Reduce credit cards, loans, finance agreements. Minimise outgoings before taking on a mortgage.

Boost your credit – Check your credit report for errors. Improve your score where possible to secure the best mortgage rates.

Grow emergency savings – Have at least 3-6 months’ worth of living expenses banked for a financial cushion.

Insure what matters – Review insurance coverage for life, health, income protection, critical illness. Bolster where needed.

Know your rights – Learn your rights and responsibilities as a shared owner and leaseholder. Seek guidance from professionals.

Run budget scenarios – Model different interest rates and cost increases to stress test your budget. Plan for contingencies.

Automate savings – Set up automatic transfers to bolster savings for repairs, staircasing, holidays.

Live below your means – Keep lifestyle inflation in check. Avoid overextending yourself financially.

Solid financial habits, prudent saving and budgeting will provide stability and flexibility to manage costs ahead.

Shared Ownership Mortgage Options

For your mortgage, look into:

Fixed Rates – Fix your interest rate for 2-5 years. Offers payment security against rate rises.

Tracker Mortgages – Interest rate tracks the Bank of England base rate. Fluctuates but can be low risk.

Offset Mortgages – Reduces interest by linking savings account to mortgage balance.

Islamic Finance – Compliant mortgages avoiding interest through alternative mechanisms.

5-Year fixes – Makes budgeting easier with longer fixed terms. May carry early repayment charges.

Compare options across multiple lenders. A broker can advise the most suitable types and rates for your needs. Consider porting your mortgage when staircasing to keep favourable terms.

Navigating the Home Buying Process

If new to home buying, learn the process and key steps:

Saving for deposit – Build your share deposit over months/years.
Getting a Decision in Principle – Shows a lender will likely approve you.
Viewing properties – Attend open houses and schedule viewings. Take notes.
Making an offer – Submit an offer at asking price or below. Haggle if needed.
Conducting surveys – Get property surveyed before exchanging contracts.
Securing a mortgage – Formally apply for the mortgage once an offer is accepted.
Exchanging contracts – Legally commits both parties. Deposit due.
Completion – Remaining balance due. Get keys on completion day!

Enlist your solicitor and mortgage advisor’s help navigating each step. Be responsive with paperwork and payments to prevent delays.

Shared Ownership Success Stories

Hearing other families’ stories can provide inspiration and lessons learned:

Millie, a single mum, bought a 25% share in a 2-bedroom flat in Chiswick. 5 years later she owns 50% and her mortgage payments are manageable.
James and Amy, a couple with a 6-year-old, purchased a 30% share in a Sutton house. They are already saving to staircase and the good schools nearby make it perfect.
Maria and Carlos bought their first 25% share when starting their family. After having two kids, they own over half their Acton flat and love living in the community.
Jemma, a young professional, opted for shared ownership for her first property. She’s happily taken on roles like leaseholder representative to give back.

From young professionals to growing families, shared ownership provides an affordable path to homeownership. Be inspired by fellow buyers who now have a place to call home.

Finding Available Properties

To find available shared ownership listings:

Check Share to Buy periodically – The official shared ownership property portal. Set up email alerts.
Follow housing associations on social media – For early listings at new developments.
Work with intermediate housing specialists – Estate agents that focus on shared ownership and affordable homes.
Explore new build sites – Visit sites under construction and inquire about future phases. Get on priority lists.
Talk to friends and family – Spread the word you’re looking to buy. Ask for any tips or leads.
Drive potential neighbourhoods – Look for signs or construction indicating new builds.

Utilise online listings but also be proactive with boots-on-the-ground networking and research. New properties become available all the time. With persistence, you can find the perfect shared ownership opportunity.

Questions to Ask When Viewing Properties

Don’t be shy during viewings. Ask questions like:

What is the total number of units in the building? Are there plans for future phases?
How many units are leasehold (shared ownership) vs. private sale?
How much are the service charges and ground rent? How often do they increase?
What amenities like parking, storage, communal areas are available?
Have there been any recent issues, repairs or planned maintenance?
What amenities and transport links are nearby?
Are factors like safety, noise, access suitable for family living?
Is it freehold or leasehold? If leasehold, how many years left?
Does the estate/building have active community groups or committees?

Visit at different times – evenings, weekdays, weekends – to get a well-rounded perspective. Engage current residents to uncover insights only owners would know.

Thorough viewings will inform if the property and area suit your family’s needs and budget.

Final Thoughts

Embarking on shared ownership is an exciting step that puts home ownership within reach. While the process involves careful budgeting and financial planning, the rewards are immense. You gain security, stability and a place to call home. Shared ownership allows families to lay roots in West London’s thriving communities, while building equity and assets for the future. Stay focused on your savings goals, understand all costs, and consult experts for guidance. With discipline and patience, your family can reap the benefits of smart shared ownership for years to come.