Apply For Shared Ownership Mortgages 2024

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Key Features

• A shared ownership mortgage is where you buy a share of a property, and pay a monthly rent on the rest.
• The initial share is usually between 25% and 75%.
• You pay a deposit on the value of the share you are buying, usually at 5% to 10%.
• Shared ownership mortgages are a great way for first-time buyers to get on the property ladder.
• To be eligible for a shared ownership mortgage, you must have a household income of less than £80,000, have good credit, and no outstanding debts.

What Is a Shared Ownership Mortgage?

A shared ownership mortgage is sometimes known as ‘part buy part rent’. It gives first-time buyers the opportunity to buy a share in a new build property.

With a shared ownership mortgage, you are able to take out a mortgage on the share of the property that you own – this is usually between 25% and 75%. You then pay rent on the rest of the property that you don’t own to a housing association.

You will only pay a mortgage on the share of the property that you’re buying. This means that the amount needed to secure a deposit is usually significantly less than if you were to attempt to buy a property outright. As such, shared ownership mortgages help lower income households get on the property ladder.

How Does a Shared Ownership Mortgage Work?

A shared ownership mortgage works by buying a percentage of a property (usually between 25% and 75%) and paying monthly rent on the rest. You only pay a mortgage on the percentage that you own, so these payments are usually significantly lower than if you were to buy a property outright.

You’ll pay a much smaller deposit to secure your share of the property too, making it a popular choice for first-time buyers. This deposit is usually between 5% and 10% of the value of the share you’re buying. For example, if you wanted to buy a 50% share of a property valued at £200,000, you’d need £10,000 for a 10% deposit, and £5,000 for a 5% deposit.

Getting a shared ownership mortgage can be a comfortable middle ground between owning and renting. You’ll also likely have the option to buy a bigger share of the property at a later date.

Benefits of a Shared Ownership Mortgage

• A Way to Save Money – You’ll be saving money on rent, so you may find yourself able to set aside more money to later increase your share.
• Choose to Sell – You have the option to sell your share at any point.
• Get on the Property Ladder – As you’ll only be buying part of a property, you will be on the property ladder, but you won’t be stretching your finances too thin.
• Staircasing – You can buy more shares in the property, reducing your rent so you’ll only be paying your mortgage.

Drawbacks of a Shared Ownership Mortgage

• Asking Permission – You may need to ask your housing association before making any home improvements.
• Limits on Selling – There may be restrictions on who can buy your home, meaning a quick sale is unlikely.
• Other Rules – There could be additional rules such as no pets or tenants.
• Service Charges – You may be required to pay service fees for maintenance of the communal areas in your property.
• Stamp Duty – You will need to pay stamp duty on the whole value of the property, if your share is greater than or equal to 80%.

Is a Shared Ownership Mortgage the Same as a Shared Equity Release Scheme?

No, shared ownership mortgages are not the same as shared equity schemes.

Shared equity schemes offer you a low-interest loan on the part of the property you can’t afford to buy. Shared ownership mortgages involve you buying a share of the property you can afford, and paying rent on what you can’t afford.

Shared equity schemes are also offered via the government’s Help to Buy Scheme.

Can I Get a Shared Ownership Mortgage?

In order to qualify for a shared ownership mortgage, there’s several criteria you need to fit. To be eligible for a shared ownership mortgage, you must:

• Have a household income of less than £80,000.
• Be a first-time buyer, or a previous homeowner that can no longer afford to buy. You could also be renting from a council or housing association.
• Have a good credit history.
• Be able to prove that you do not still owe any mortgage or rent payments.

Military personnel will be given priority over other groups through government-funded shared ownership schemes. People with a long-term disability could also qualify for a shared ownership scheme through the government’s Home Ownership for People with Long-Term Disabilities Scheme.

How Can I Get a Shared Ownership Mortgage With Lending Expert?

Here at Lending Expert, we do the hard work for you by comparing the different shared ownership mortgages that would be available to you. We provide impartial advice to help you find the best fit for your needs.

Get in touch with us to take advantage of our expert advice and find the best shared ownership mortgage for you!

Where Can I Get a Shared Ownership Mortgage With Lending Expert?

We proudly offer shared ownership mortgages right across the UK. From Aberdeen and Cardiff to Liverpool and Canterbury, Lending Expert is here to find the perfect shared ownership mortgage for you!

What Is Staircasing?

Staircasing is where you keep buying shares of the rented part of the property you have a shared ownership mortgage on, until you own all of it. You’ll buy these shares from the relevant housing association, and increase your share off the property step-by-step.

You’re now able to staircase your property in increments of 1%, usually all the way up to 100% where you’ll own the property. At this point, you wouldn’t be paying any rent, only your mortgage payments.

The amount that you’ll pay for additional shares is dependent on the value of the property at the time – this will be determined by the housing association. For example, if the property is valued at £200,000 and you’d like to buy an additional 30% share, the cost of the valuation would be £60,000.

Can I Build an Extension on a Shared Ownership House?

Yes, you can build an extension on a shared ownership house, but only with approval from the housing association.

How Does Shared Ownership Work When You Sell Your Home?

The housing association will have the opportunity to sell the property before you do. This is known as the ‘first refusal’, meaning they can find their own buyer if they want to. This is also what happens if you don’t own a full share of the property at the end of your tenancy.