Shared Ownership Mortgages

How do shared ownership mortgages work?

Shared ownership mortgages operate on a part-buy, part-rent basis. You buy a share of a property from a housing association, and pay a reduced rent on the remainder of the property. Through the scheme, arranged by a specialist local Help to Buy agent, you buy between 25% and 75% of the property. Through a process called staircasing, you can buy a larger share of the property at a later date, based on the value of the property at that time. 

Who is eligible for a shared ownership mortgage?

  • Have a combined income of less than £80,000 outside of London, or £90,000 within London
  • You will be living the property, rather than renting or sub-letting any part of it
  • Permanent right to live in the UK
  • Open to both first time buyers and current or previous homeowners

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Frequently asked questions about shared ownership mortgages

Which properties are eligible for a shared ownership mortgage?

To be eligible for a shared ownership property, the home has to be a property managed by a housing association, which can be found with the help of your local Help to Buy agent. 

What deposit is needed for a shared ownership mortgage?

Typically, you will need between a 5% and 10% deposit for a shared ownership mortgage. Importantly, the deposit is required as a percentage of the share of the property you are buying, rather than the full purchase price. 

How much rent is due with a shared ownership mortgage?

Often, the rent due will be 3% of the value that the housing association owns, and therefore varies based on the property price and the share that you have bought. 

Since shared ownership properties are leasehold, you will have annual ground rent and monthly service charges to pay on top of the rent. 

What is staircasing?

Staircasing refers to the process of gradually buying a larger share of your property. Some schemes have time restrictions, whereas others will allow you to buy a larger share at any point. Depending on your scheme, you will be able to buy extra shares in chunks of 1%, 5% or more. 

The costs of buying the extra shares will be linked to the property value when you choose to increase your share, not when you first bought the property. 

You will have to pay legal and admin fees every time you increase your stake in the property. However, you will own a larger percentage of your home, so the value owed in rent will decrease.

Are you free to make changes or improvements to a shared ownership property?

Depending on your lease and terms of ‘restrictive covenants’, you might require approval before undertaking structural changes to your property. It is usually no issue to decorate as you wish.

Ready to discuss a Shared Ownership Mortgage?

Our expert team is on hand to offer professional and tailored advice to ensure that you make the best decisions regarding your home finances. We are not tied to any specific lender so we can make sure that we help you to select the right shared ownership mortgage. Call us for an initial, free of charge consultation.  There is no obligation to use our services and you can meet in one of our offices in Horsham and Southwater, or arrange a phone based appointment.

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