Shared Ownership Mortgages Explained

We can help you find the best mortgage for Shared Equity Schemes

Are you finding it difficult to get on the property ladder? It could be that your earnings are not high enough to enable you to obtain a mortgage which is sufficient to buy a property, or like lots of people, the high cost of renting means that you just don’t have any spare money to put away for the huge deposit needed. There is an answer to this problem! A shared ownership mortgage.

This is where you own part of your home and rent the other part (generally from a housing association). Usually shared ownership offers can begin at 25%, 50% or 75% of the property value. As part of the shared ownership offer, you might have the option to buy further shares in the property as time goes on if it becomes economical.

KEEP IN MIND: There is criteria that is required to qualify for a shared ownership property; nonetheless they are no longer limited to “key workers” as previous schemes where.

Why people decide to buy with shared ownership

Due to the current economic troubles, and as mortgages have actually become harder to get, the housing market has actually decreased. As a result of this developers have discovered that their brand-new houses have actually been harder to sell and so the chance to sell through shared ownership has actually become increasingly popular. Shared ownership is where you get a portion of the house, for instance 25 per cent, and the housing association, who has actually purchased the house from the developer, has the remaining 75 per cent.

These properties are usually on a leasehold of 99 years. Portions of the property are usually sold in 25 per cent increments, although ‘stair casing’ allows you to purchase beyond these increments if you need. Therefore you live in the home and pay a mortgage on the 25 per cent, and lease on the 75 per cent that the housing association owns. There are various kinds of schemes offered, some are for social housing occupants and others can be for essential workers, such as nurses and teachers and is generally readily available to you if your income is less than ₤60,000 a year, although this can be higher in London. You can sell at any time however typically the housing association get first chance of the share that you wish to sell, or they find a purchaser for it.

Deposits needed for shared ownership mortgages

You would still need a deposit on this option, generally about 5-10 per cent of the value of the property that you are mortgaging, and of course more is always welcome! Shared ownership is a wonderful opportunity since it means that you normally require a lower deposit to begin, however pay back monthly as you would with a mortgage. For example, say you had 50 per cent of a property worth ₤100,000, you would only need a ₤5000 deposit, rather than the ₤10,000 that you would generally require, which makes home ownership far more feasible specifically for first time buyers who have struggled to save for a deposit alongside paying inflated rental rates. You should be entitled to the same variety of mortgages as consumers who are purchasing 100 per cent of their home.

Organising a mortgage for a shared ownership property

Despite the advantage of having a shared ownership property, this plan does have the potential to end up being complex when you get to the phase of organising a mortgage. Some mortgage providers can be careful due to the fact of the shared ownership element and if you approach numerous lenders and are declined then you might find that your credit history might be negatively impacted. For that reason we suggest that you make use of a knowledgeable mortgage broker to arrange your mortgage, since we are market leaders who can put your mortgage application with the right loan provider, in this case one who is happy to arrange your mortgage on a shared ownership basis. The reason that we can do this is due to the fact that we are market leaders whose experience and track record means that we can use our knowledge to work with an array of lenders and find the very best deal for you. This means that you do not need to spend time calling different loan providers to learn if they will accept a mortgage on a shared ownership property, and of course you do not need to go with numerous, potentially damaging, credit checks.

We offer an initial no-obligation appointment, free of charge, so it is well worth talking with us to see if we can help you arrange your shared ownership mortgage, saving you time, expense and inconvenience!

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