If you’ve followed me for a while, you’ll know that I’ve been considering starting the process of purchasing my very own first home, which yes, I’ll admit, is a little daunting. Our generation know all too well how crazy house prices have got, and how in order to be able to put yourself in a reasonable position, one that the bank will respect and allow you to borrow from them, and one in which the house builder or developer will allow you to purchase, you need to have a pretty hefty house deposit. In most instances, you’re expected to have at least 10%, with 20% being even more favourable.

But how realistic is that? The average house price within the UK is valued at £226,906, meaning you’d need to save a deposit of between £22,690 – £45,380 even just to be considered able to purchase the property. Now I don’t know about you, but to me that is just crazy money, and something that’s simply not possible in normal society. After quickly realising if I still wanted to be able to have any form of life for the next 10 years, and not put away literally every penny I ever earn and not step outside of the house, I pondered over the fact that there must be another way. 

It turns out, researching how to purchase your first home can provide you with a real wealth of understanding, and open your eyes to a real range of alterative possibilities. If you’re renting like us, then you’ll completely be on the same page as us when we say that saving that kind of deposit isn’t possible, although we should be able to save a reasonable deposit over time. Even though the housing market, and property prices in general appear to be pretty hideous at current, I guess it could be argued that the government and several housing associations are doing their best to support first time buyers where they can. Whether it’s through the Help to Buy ISA, where the government will give you an additional 25% on top of whatever you’ve saved, or a shared ownership scheme, there are other avenues to go down. 

I’ve found myself pondering over the shared ownership option for some time now, for a couple of reasons. Originally, I was unsure, due to concerns around leasehold environments – will I be able to keep my pets? Will I be able to make the home improvements that I want to make, to make the house my home? Turns out that if you look in the right places, there are housing associations out there that are more relaxed rules and are more than happy for you to treat the home as you wish, after all, you do own a portion of it. 

If you’re not familiar with the premise of shared ownership schemes, they’re actually pretty simple to understand. You have the option to purchase between 25% – 75% of the home, and the housing association own the rest. In theory this means that you could actually only need as little as a 5% deposit of 25% of the home, and a mortgage on only 25% of the home, making the deposit and mortgage repayments much smaller than that of purchasing a home outright. Of course, it’s important to remember that you also pay the housing association rent on the portion of the home that they currently own, but you do have the option to buy your shares back in increments, known as staircasing. 

Let’s take a look at a bit of an example, to put this theory into actual practise and work out exactly how much money we could be saving by using a shared ownership scheme. Say you’re down south in a notoriously expensive part of the country and you’re looking at one of the many shared ownership homes for sale in Cornwall, and the current property value is set at £210,000. Through a shared ownership scheme, you could purchase just 25% of the property, at a value of £52,500*, meaning needing a 5% deposit of only £2,625*, which definitely sounds like a more reasonable sum than those that are into double figures.

There are a couple of potential draw backs that need to be considered. As previously mentioned, shared ownership is leasehold, so you need to be clear with the housing association that you’re jumping into bed with (so to speak!) on what their terms are, and make sure that you’re comfortable with them. You’re also going to have to still pay for survey and solicitors fees, so make sure you have a little additional bumper of savings on top of your required deposit. Shared ownership schemes are definitely something to consider, particularly if you’re currently stuck in the renting circle, and could well make all the difference in you being able to take that very exciting first step onto the property ladder. 

*Price based on 25% shared ownership and a 95% LTV mortgage. Shared ownership home are bought as leasehold properties.