Shared ownership dilemma - any advice please?

[namechangeforthis234]

I have 50% shared equity in my home, paying £300 a month rent on the other 50%.

I'm starting to worry about what happens when I retire (which is over 10 years away but still keeping me awake!) as I'll have just about paid off the mortgage by then but can't afford to buy the other half of the house as I'm a single parent with a low-ish salary.

As far as I can see I have 3 choices -

1. continue working until I die so I can keep paying rent
   
2. move to a tiny bedsit locally (which is all I'll be able to afford with the equity I'll have)
   
3. move away to somewhere cheaper, but then I'll be a long way from most of my family and friends
   
   I don't know what else I can do and none of the above options are ideal... does anyone have experience of this or suggestions to put my mind at rest?
   
   Thanks

[Stompythedinosaur]

I think I would probably downsize. Can you overpay into your pension in the remaining years?

[namechangeforthis234]

Stompythedinosaur I'm going to have to look into that, I've got a workplace pension which I pay a small top up into but I can't see it being enough to get by on to be honest, let alone pay £300 rent

I feel quite sad thinking I'll see out my days in a tiny studio flat though...

[blackhorses]

What age are you? What age are the children? Are they still living at home? How tight are your outgoings to your income?

If I could afford to do so I think that I would overpay the mortguage payments as much as I could afford to do so now.

As an example if you could finish it in 5 years instead of 10 (doesn't mean paying as much as double because of the interest) that would put you in a much better position.

That would then give you 5 years mortguage free before retirement where you could save substantially with a view to adding that money to the equity from the house to buy somewhere smaller outright after the 5 years.

You could then downsize and continue working part time for a few years past retirement age to build up some savings to supplement your pension (much easier to do with no dependants and no mortguage!)

[Hippofrog]

If you are on a low retirement income you could be entitled to HB towards the rent element of the SO property.

[namechangeforthis234]

Thanks blackhorses...

What age are you? early 50s

What age are the children? Are they still living at home? Anticipate them moving out in the next 3-5 years, if they can afford it...

How tight are your outgoings to your income? I do have a bit spare which I'm putting into savings at the moment. I think I'll have to find a financial adviser to see whether I'd be better putting that into mortgage or pension...

[granadagirl]

How much would the other 25/50% cost to buy?
Also I’ve heard that if you own 75%, you don’t pay rent ?? Look into yours
Just thinking the £300 a mth in rent it may not be that much in mortgage? Unless it’s London you live

You can get mortgages into your 70’s now
I know we don’t like to think of still paying one by then
But it would give you peace of mind to be able to stay in your own house and be near family/friends

[namechangeforthis234]

Hippofrog ooh that's good to know, thanks

[namechangeforthis234]

Thanks granadagirl

How much would the other 25/50% cost to buy? about £140k for 50% (I'm in SE England!)

Also I’ve heard that if you own 75%, you don’t pay rent ?? Look into yours Really? That's worth investigating, thanks!

[granadagirl]

Let’s know if it’s true when you find out ?
Also re the low income or retirement, if your just getting government pension you would get HB
Do you have an idea how much you would get in private pension mth, as if not a great deal you may still be able to get some HB to the rent side

[namechangeforthis234]

granadagirl will do!

I think I'm going to have to have a chat with a financial adviser, get everything together and see what I can do for myself financially. At least I've got a few years to do something about it I guess!

[JoJoSM2]

It would be really helpful to sit down with an IFA.

I also imagine that you will be able to afford the £300 in rent comfortably with a state pension + the pension at work. Generally, outgoings in retirement tend to go down.

[Firefliess]

If you buy a further 25% share you will pay half of what you're currently paying in rent (the rent-free 75%ownership thing is a different product sadly, you can't convert your shared ownership home into it)

I'd try to downsize or move to a slightly cheaper area if I was you. Once the kids are properly left home, but possibly before you retire, as you might that was be able to get at least a small mortgage to help. And yes, do check out your entitlement to universal credit (if under retirement age) or housing benefit (once over retirement age) The amount the government thinks you need to live on as a pensioner is quite a lot more than a working age person, so you might be entitled to some help once you're 67/68

[namechangeforthis234]

Firefliess
JoJoSM2

Thanks, I'm going to have to speak with a financial advisor and see what I can afford...

[Hotandknackered]

OP you have my sympathy. I'm 35 but moved out of London at 30 purely because I could only see this as an option for retirement.I didn't have a burning desire to own a home but did know I needed to not be paying rent in retirement. I feel you will definitely not be the only person in this situation. As house prices in London and the South East are so high and there is a generational devide for many. I think down sizing is the best option. Could you possibly try to move a bit out of the area? Small living is much more of a thing as people are forced into it. So perhaps you could get a nice modern studio? I'd personally give up space to stay in an are I know and like.

[Wilsonscaresme]

Would one of the DC consider buying it with you?

So you can both pay it off aot quicker?

[namechangeforthis234]

Thanks Hotandknackered (loving the name by the way, sums me up too!), I think I will have to downsize, but hopefully not as drastically as I fear if I get some good financial advice now...

Wilsonscaresme - another fab name, hi Jim! - they're not old enough yet but it might be something to consider in time... thanks

[Firefliess]

I'd also suggest that if your can manage to borrow any more in a mortgage that's well worth doing currently as mortgage interest rates are often lower than the % if unsold equity that housing associations charge in rent in shared ownership. Ie you could buy a further share in the property and pay more mortgage and less rent and end up better off by the time you retire

[blackhorses]

@namechangeforthis234

Thanks blackhorses...

What age are you? early 50s

What age are the children? Are they still living at home? Anticipate them moving out in the next 3-5 years, if they can afford it...

How tight are your outgoings to your income? I do have a bit spare which I'm putting into savings at the moment. I think I'll have to find a financial adviser to see whether I'd be better putting that into mortgage or pension...

One thing to think about - if the kids are likely to move out in the next 3-5 years your expenses are likely to dramatically reduce at that point (or a couple of years after if they are thinking of uni).
So the amount you can save a month after they've left will be hugely more than you are saving now. . .

[ellendegeneres]

Wait when they move out can you not take in a lodger or two depending on how many bedrooms? (Sorry, didn’t spot if you said) To pay off remaining mortgage and buy second half?