Shared Ownership

Shared ownership.

What is shared ownership?

Shared Ownership mortgages are a government scheme which are primarily focused on helping people to get onto the property ladder. Between 25% and 75% of a property is usually bought from a housing association or house builder. This allows you to take out a smaller mortgage, with a lower deposit. And you will then pay rent on the remaining part.

What criteria do you need to meet in order to qualify?

There are several requirements which must be met. This includes a maximum household income of £80,000 per year or £90,000 if you live in London.

You will currently need to be one of the following:

  • A first time buyer.
  • A previous homeowner who cannot afford to buy now.
  • Renting from a housing association or the council, or have a long-term disability.

Finally, you will need to live in the property and you cannot rent it out fully or partially.

How does Shared Ownership work

When you buy a property through a Shared Ownership scheme, you typically purchase between 25% and 75% of the property, and a housing association will own the remaining share which you pay rent on. As of April 2021, it’s been possible to buy as little as a 10% share in your home, which makes the scheme even more affordable for those on limited incomes. Because you only need to secure a mortgage for the portion of the home you’re purchasing – your share, the amount required for a deposit is much lower than if you were buying a home outright.

If you fit the criteria and are thinking about buying a Shared Ownership house, you’ll first need to check that the property you are looking to buy is included in the scheme. Speak to the house builder or federation to do so.

Deposit Requirements

Shared ownership properties don’t necessarily require the traditional 10%-20% deposit upfront. They can be as low as 5%, depending on the lender. When seeking shared ownership mortgage advice, make sure to outline how much you have saved and be completely honest about your income.

What are the benefits of shared ownership?

Separation

Some things in life don’t always pan out the way we planned. Sometimes relationships end, and finding a new place to live can be stressful. As your household income will decrease to just your own income, you may not be able to buy your own home without assistance. A shared ownership mortgage advisor would be able to check your eligibility regarding shared ownership.

Couples

Whether you are in a long-term relationship, engaged, or married; buying your own home is an exciting prospect. The average salary in the UK is around £25,000 per annum, before deductions. Therefore, a couple would have around £50,000 per annum. If you both had no commitments you could borrow up to £240,000 which is lower than the average housing price. This is where a shared ownership mortgage comes in.
Disclaimer:
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayment on your mortgage.