Shared ownership mortgage

Shared ownership is a great way to get on the property ladder

Shared ownership

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We can help you get onto the property ladder with a Shared Ownership mortgage

The Shared Ownership scheme could help if you’re struggling to save enough money for a deposit, you could still get onto the property ladder. Whether you’re a first-time buyer or home mover, we could help you buy a share of between 10-75% of a property and then pay rent on the remaining share.

This scheme aims to help buyers who cannot afford the mortgage on 100 percent of an existing house or new-build home, and is available to people with an income of less than £80,000.

Through shared ownership, you may be able to overcome the problem of high deposits and purchase a home that might be out of reach otherwise.

  •  No deposit options available
  •  Ability to buy additional shares in the property
  • Competitive rates

Shared Ownership Explained

Shared ownership is a housing scheme designed to help people get onto the property ladder who may not be able to afford a home outright. In the UK, it’s a popular option for first-time buyers and those with lower incomes. 

Essentially, it allows you to buy a share of a property (usually between 25% and 75%) and pay rent on the remaining share to a housing association or a private developer.

Over time, you can increase your share of the property through a process called “staircasing,” eventually owning the property outright if you choose.

Understanding Shared Ownership

Shared ownership offers a flexible and affordable way to own a home, especially in areas where property prices are high. Here’s how it works:

  1. Buying a Share: Instead of purchasing the entire property outright, you buy a share of it, typically between 25% and 75%. The share you buy is funded through a mortgage and a deposit, just like with any other property purchase.
  2. Paying Rent: You then pay rent on the remaining share of the property that you don’t own. This rent is paid to the housing association or private developer who owns the remaining portion.
  3. Costs and Responsibilities: As a shared owner, you’re responsible for maintaining your home and paying your mortgage, as well as any service charges and ground rent associated with the property.
  4. Staircasing: Over time, as your financial situation improves, you have the option to buy additional shares in the property. This process is known as “staircasing.” With each increase in ownership, your mortgage payments may increase, but your rent payments will decrease proportionally.
  5. Eventual Ownership: If you choose to staircase all the way up to 100% ownership, you will no longer need to pay rent on the property. At this point, you become the sole owner of your home, giving you the same rights and responsibilities as any other homeowner.

Benefits of Shared Ownership

  • Affordability: Shared ownership allows you to get onto the property ladder with a smaller deposit and mortgage than if you were buying a home outright.
  • Flexibility: The option to staircase means you can increase your ownership of the property as your financial situation improves.
  • Security: You have the stability of homeownership without the pressure of needing to buy the entire property upfront.
  • Potential for Profit: If property prices rise, the value of your share of the property will also increase, giving you the opportunity to make a profit when you eventually sell.

Shared ownership can be an excellent option for those who want to own their own home but are unable to afford it outright.

With its flexibility and affordability, it provides a stepping stone onto the property ladder and offers the potential for eventual full ownership. 

If you’re considering shared ownership, it’s essential to do your research and seek advice from a mortgage broker or financial advisor to ensure it’s the right option for you.

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Shared Ownership FAQ

Shared ownership is a government-aided initiative to help first-time homebuyers and existing homeowners purchase a new property if you cannot afford all the deposit and mortgage payments for a home that meets your needs.

This scheme aims to help buyers who cannot afford the mortgage on 100 percent of an existing or new-build home, and is available to people with an income of less than £80,000 (£90,000 a year or less in London).

Through shared ownership, you may be able to overcome the problem of high deposits and acquire a home that might be out of reach under other forms of financing.

With the minimum share of 10%, getting together the finance for a home valued at £120,000, for example, means you will only have to find £12,000.

You will also be able to pay a subsidised rent to the owners of the property as well as annual ground rent and service charges as your home will be a leasehold property.

If you want to increase your ownership of the property gradually, you can buy additional shares of just 1 percent at a time. This process is known as ‘staircasing.’ Using the example of the £120,000 property, you could pay as little as £1,200 for an additional 1 percent share. This allows you to gradually build up ownership in a more affordable manner.

It’s worth remembering that the amount you pay for the additional share may change, as it will be based on the value of the property at the time you make the increase, not the original price.

There are different Shared ownership rules depending on he properties location

If you buy a new-build shared ownership home, the rent limit is 3% of the value of the share the landlord owns. Most landlords charge 2.75%.

The table shows how much the rent might be for a home valued at £400,000 and a home valued at £200,000.

 Home 1Home 2
Total value of the home£400,000£200,000
Your share (40% of the total)£160,000£80,000
Remaining share (60% of the total)£240,000£120,000
Rent for the first year (2.75% of remaining share)£6,600£3,300
Your monthly rent£550£275

You can buy more shares in your home after you become the owner. This is known as ‘staircasing’. When you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the landlord’s share.

You can usually buy shares of 10% or more at any time. Some older leases only allow you to buy shares of 25% or more. Some newer leases will allow you to buy shares of 5% or more.

If you bought your home on or after 1 April 2021, you may also be able to buy shares of 1% each year for the first 15 years. Ask your landlord if this applies to you. You cannot buy shares of 2%, 3% or 4%.

Before you buy a shared ownership home, ask the landlord for the ‘key information document’ to check what share amounts you’ll be able to buy in the future.

For free initial advice from our qualified mortgage brokers about a Shared Ownership mortgage, call 0800 197 0504 or click below to request a callback at a time to suit you.

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