Should I just give up on the idea of buying a house?

[radiateforme]

17k soon to be in the bank. Income of 25k per year. Have recently been in a situation where I've afforded 800 a month rent, plus 1000 childcare fees and bills etc. Bit of help from UC. Now live with family member to save a bit more. Feel like I've spent the last 10 years working my arse off, being frugal, saving, driving a crap car, and STILL cannot afford a house. The cheapest 2 bed near me that's suitable is around 160k. And that's a doer upper. According to the bank I can borrow 100k. Deposit of 15k, still 45k short. It's hopeless isn't it? Feel like it's just going to get worse and I'm better off just living my life, saving a bit, going on a couple of hols and getting a council flat (if I'm lucky). Feeling defeated as you can probably tell.

Can you do a shared ownership OP? We’re looking at doing a shared ownership on a 3 bed once we’ve sold out house. The minimum deposit was £3.5k, minimum share to buy was 25% (roughly 64k) then you rent the rest.

Shared ownership is specifically tailored to people like you, who can’t get a big enough mortgage but have the income to pay the bills.

Just wanted to share my sympathies OP. House prices are insane.

We live in a poor Yorkshire city, paid 160K for our semi a couple of years ago, now house price has shot up to 200K, and we wouldn't have been able to afford our own house now if we didn't get it when we did!!

We are in our 20s and feel so so guilty, even though it isn't our doing. It is disgusting, and older generations should be passing down wealth if they are able to.

Keep going, it will get easier, you are doing really well with 17K saved!

Have you looked into shared ownership at all?

Hopefully you would be able to staircase fairly quickly which makes it more worthwhile.

I would recommend shared ownership too. £25k isn’t a particularly low income IMO and you have more than enough for a deposit as well as being eligible for up to a £100k mortgage, then pay rent for the remaining equity to the housing association.

What @RandomMess said. I just had a look to see if £115000 would buy anything anywhere near me (SE, pricy area) and was surprised to find a few reasonable looking 2 beds under shared ownership within that budget.

When I did shared ownership years ago I had to go on the council list first then got transferred. I did DIYSO.

It may be different where you live but absolutely worth looking into.

You used to be able to apply for housing benefit to contribute to the rental element (disregarded the cost of paying your mortgage obviously) again that could well be different under UC but worth finding out.

Are any of your family in a position to let you build a ‘granny flat’ in their garden? It could provide very cheap accommodation.

I feel your pain OP. My OH and I would save and then life happens and it took all the savings. We would need 26k saved up for a 10% mortgage to buy a not so great house. We both work FT, have reasonable salaries, but spend 800 a month on childcare and even more to rent a two bed flat. We are a family of 4. We are finally getting to the point where we can save. Our family can't or will not help get a deposit, not even a small loan - which is their perogative - but it's hard watching others just get it handed to them as a "gift".

One of my friends bought a large one bed and turned it into a two bed without sacrificing much space. She turned the long hall way into a kitchen and put a small lounge where the kitchen was and turned the old lounge into a second bedroom. If you can live with a one bed flat while you save to make the changes it might be an option. You seem to be a very good saver, so it might work for you.

Shared ownership is helpful but there are some pitfalls to be aware of. It can be harder to sell on a shared ownership property as the next buyer also has to fit the criteria. I heard an alarming report on R4 last week (money box I think ) which said that if for some reason you fall behind on the rent element you can lose the percentage which you ‘own’ Sounds insane but that’s what they were reporting to be true.

This explains about shared ownership

Lots of posters suggesting shared ownership but OP seems to be ignoring that option.

@Poorlykitten

Lots of posters suggesting shared ownership but OP seems to be ignoring that option.

I'm not ignoring it, I'm looking in to all my options.

OP, no further advice but just to say you have done amazingly well and you should be proud of yourself.

The housing situation in this country is dire, and those blithely suggesting that you should 'just move somewhere cheaper' don't have a clue (and I am someone who is actually in the process of moving somewhere cheaper, but I wouldn't have done so in your current position!)

Best of luck

OP Are you sure your share of the equity is only 17k? House prices have gone up massively over the last few years.

@Milesbennettdyson

I’m going to get strung up on here for saying this but sometimes you just have to do what you’ve got to do!!

First of all I’d seriously explore shared ownership.

If that doesn’t work get thrown out of your current house and present as homeless. You may have to go into temporary accommodation for a while that might not be pleasant, but if you get a council house you will eventually get the right to buy.

Depends where OP lives, Wales and Scotland have stopped right to buy a few years ago, English councils can refuse it on the basis of a housing shortage.

@radiateforme

What's even worse is that once I've got the 17k in the bank (from house sale, ex has been living there), if I can't buy a house, my universal credit will stop completely and I'll just have to use my savings anyway on childcare and rent because I'll have over 16k. So all that money I've worked hard for will be gone. I am so stuck and really gutted with the whole situation.

I'm confused OP. As hard as it would be, you should get the cheapest studio flat/one bedroom flat and work your way up the property ladder.

Pay your mortgage for 5 years on the small place and then use the built up equity to buy a bigger place.

Every rent payment you're making could be building equity for you, so even if you need to be somewhere less than ideal location/size wise it will be better than renting. As time goes on you'll get equity built up and hopefully also maybe increase your income.

Maybe start with a 2 bed house. Then when your child is in school aim to move to a 3 bed house and take in a lodger.

That's what I'd do I think.

@BarbarianMum

Maybe start with a 2 bed house. Then when your child is in school aim to move to a 3 bed house and take in a lodger.

That's what I'd do I think.

Is this assuming you are in OP's current position? If so, how exactly would you afford that 2 bed house?

Could you buy jointly with a relative?

@Smalldogbigdog oops, typo. I meant 2 bed flat. Or even a 1 bed for now, better than 1 room.

@Locc

Yes 😳 it just didn't occur to me that would be benefit fraud.

Sorry!

(Luckily op is more with it than I am)

Put yourself on the list for a council house.
It may be that you can never afford to buy, there is no shame in that, invest your savings elsewhere.

If you can’t stick it out living in a small bedroom at families home, the you need to bite the bullet and private rent again.