We bagged a two-bed home in a posh area with just £10k deposit – but had to make a ‘life-changing’ decision to afford it
CAR fanatics Matt Abela and Holly Whyatt bagged a two-bedroom home with just a £10k deposit through a little-known scheme – but they had to make a “life-changing” decision first.
The couple, both 31, now own a home in Sittingbourne, a wealthy area of Kent, after selling off their beloved old Hyundai.
The pair used the £10,000 from the car sale to lay down a deposit and buy a 55% share of their property, worth £325,000, through Shared Ownership.
A shared ownership scheme is where you buy a share in a house and pay rent on the remaining amount.
Matt and Holly, a senior sales administrator for Hyundai, moved in with Holly’s parents in Maidstone in early 2020 and they realised they didn’t want to leave the area – but Kent is very expensive to buy compared to other areas in the UK.
The couple worried they would never be able to buy anything at all, let alone a home they really wanted.
But when the couple discovered their estate, which is set in a country park, they fell in love – and that’s when they discovered that they could buy through a shared ownership scheme for far less than a standard deposit.
It occurred to them that by selling one of their beloved cars, they might be able to actually buy a house.
They eventually decided to sell their Hyundai, which gave them £10,000 to put down as a deposit on a spacious three-bed home.
Matt, a maintenance engineer for McClaren, said: “At one point, we owned as many as five cars, but we decided it was time to put some roots down and invest in our own space.”
Holly added: “Swapping a car for a deposit for a new home has been life-changing and incredibly freeing. It’s even better than we thought it would be.
“We had too many cars anyway, so it was a very small price to pay!”
Both Matt and Holly work long hours, so they decided a new-build was a more practical choice than a home that might need extra work.
Matt explained: “Coming home after a long day at work and having to fix a leak or spend our weekends plastering is my idea of hell – I just want to be able to relax when I’m at home.”
The property, which they bought late last year, came with two-year defect cover included in the price.
It’s also based just a short distance from Sittingbourne town centre, which has everything they need from restaurants to supermarkets.
“Our new home is incredibly spacious inside and out. Everyone who
visits comments on this and compared to the other new-build homes we viewed, this one definitely stood out,” Matt added.
The couple moved into their new home in December 2023 and are now paying £1,020 on the mortgage, plus £389 in rent to the landlord who owns the rest of the share – £1,409 in total.
What is shared ownership and how does it work?
A shared ownership scheme is where you buy a share in a property rather than the entire home.
You then pay rent to a landlord on the amount you don’t own.
The latest figures from the English Housing Survey estimate around 202,000 households live in shared ownership properties – 1% of all homeowners across the country.
You can usually buy a share of between 25% and 75% of the property’s full value, depending on where in the UK you want to buy.
For example, in Northern Ireland, you can buy between 50% and 90% share of a property, up to a maximum value of £195,000.
In Scotland, you can buy between 25% and 75% of a home’s value.
You pay rent on the remaining share you haven’t bought to whoever owns it. In most cases, this is a housing association, council or private organisation.
As an example, if you bought a 40% share in a new-build home, you might pay rent on the 60% owned by the estate.
You may also have to pay maintenance fees for shared areas in the development.
By buying a share of the property, you only have to take out a mortgage on that amount.
According to the Government, you’ll usually need to put down between 5% and 10% of the share you’re buying as a deposit.
Over time, you may be able to increase your shares in the property which means in turn you will pay less rent to your landlord.
What are the pros and cons of shared ownership?
The main benefit of a shared ownership scheme is that it allows you to buy a home you wouldn’t have otherwise been able to afford.
You can get on the property ladder with a much lower deposit than if you bought the entire home, and you may be able to build up the share you own over time.
This is a particular draw to first-time buyers in the current market who are struggling to save enough for deposits.
One of the major downsides, however, is that you will have to keep paying rent on the part of the house you don’t own alongside your mortgage.
You need to factor both payments into your financial planning when you’re looking to buy through a shared ownership scheme.
Other first-time buyer schemes
You don’t have to buy your first home through a shared ownership scheme. Here are a few alternatives.
95% mortgage guarantee scheme
First-time buyers can put an offer down for a house with a 5% deposit, then the loan is for 95% of the property’s value.
The property must be worth £600,000 or less and won’t qualify if it is a new-build.
You also can’t sign up for an interest only mortgage if you buy a home through the scheme.
One major downside to the scheme is that with a smaller deposit, you are left paying off a large chunk of the property’s value.
You will likely be offered a higher interest rate as well.
So, if you can, try offering up to a 9% deposit rather than the lower 5%, so you pay less overall in the long term.
First homes scheme
You can buy a home for 30% to 50% less than its market value, but this same discount applies when you come to sell the property.
You have to be a first-time buyer to be eligible for the scheme, and you (and your partner if you have one) must have a combined income of £80,000 or less, or £90,000 if you live in London.
One drawback to the scheme is that it is only available in England.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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