Meet Cheryl…

Cheryl is 32 and lives in London with her husband and one year old son. She moved to her one bedroom flat, which she bought through a shared ownership scheme, six and a half years ago. We met Cheryl when she attended our Cred & Breakfast event in June 2018, where we spoke about her hopes to be able to buy a bigger flat in the near future now that her family has expanded.

Cheryl’s aim is to get herself mortgage ready for the next step and also to find out where she stands in today’s tough market: “It’s hard. I mean it’s so out of reach, especially for a born and bred Londoner. I’ve got a one bedroom flat at the moment but my little boy wasn’t here when I bought it so I feel a bit stuck. I love my flat but I need to upsize and it’s a shared ownership so I need to find out where I go from here.”

What is shared ownership?

A shared ownership scheme is a cross between buying and renting. These type of schemes are available across the UK and are often aimed at first time buyers. You don’t own the property outright, but you can buy a share of between 25% and 75% and then pay rent for the part you don’t own at a reduced rate. You’d still need a deposit for the part of the property you buy, but rather than a 10-20% deposit, shared ownership mortgages only normally require 5% of the property’s value.1

Cheryl feels like she’s benefitted from going down this route and getting a second shared ownership property shouldn’t be a problem for her, so it’s something she’s open to: “I don’t think I’d have an option to do anything else really. I’ve found that it’s really helped me and it certainly feels like my property. When I was renting I felt in a very precarious situation where you could just be given a month’s notice. I’ve had a really good experience with shared ownership and I would do it again.”

Preparing to up size

Cheryl’s looking to be able to upsize in the next two to three years and is taking steps to prepare: “I’ve got myself a part-time permanent job, because before I was self-employed. I really enjoyed setting up my own business, which is great and doing well. However, now that I’m thinking of needing a bigger mortgage, I felt it was a good idea to get a permanent position, as I wouldn’t have three years’ worth of tax accounts for my business.”

Cheryl learnt a lot from our Cred & Breakfast event – “I feel a lot less in the dark about things. I spoke to a mortgage adviser and got some more information about mortgages and the amount I could borrow based on salaries. I also want to get my next mortgage with my husband, so they helped me figure out where I stand with that, as I think I will have a larger equity stake.”

She’s also proactively monitoring her credit report and score to help her get ready for the next step: “I found out at the Cred & Breakfast event that my credit score would be considered good, so I am keeping an eye on it and taking steps to maintain a good score.”

Getting mortgage ready when you’re self-employed

If you’re also self-employed and looking to get a mortgage, but are feeling a bit daunted, there’s a few things you can do to help you along the journey:

  • Keep detailed accounts and up-to-date records. It’s likely that you’ll need to show these for at least the last two years when a lender assesses your application
  • Work with an accountant to make sure your accounts and tax returns are all prepared as they should be
  • Keep a track record of your regular work
  • Work towards having a good credit history. For more information click here.
  • Save towards having a healthy deposit. Read our guide to saving here.
  • Speak to a mortgage broker about the options available

Over the next 12 months we’ll be checking in with Cheryl to see how things are going with her preparations to upsize to a bigger property. You can also find lots more useful hints and tips on the house buying process on our blog.

 1 Information taken from: https://www.uswitch.com/mortgages/guides/shared-ownership/