Shared Ownership Mortgages
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Shared Ownership Mortgages

 

Shared Ownership Mortgages – (Up to 100% of your share) Shared Ownership Mortgage schemes are used for part buy, part rent schemes commonly known as shared ownership. when you buy a shared ownership property, you only buy a percentage stake in the property, usually 25 to 75 per cent – from a housing association. Although this can be affordable, as you only own a percentage of the property you will miss out on some of the equity growth if the housing market rises.

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You can, however, staircase‘ your shared ownership mortgage which means buying another portion of the property later on.

Many of these shared ownership mortgage schemes, which often offer properties at a discount, and are often open to all comers through housing associations. Shared ownership mortgages vary from lender to lender with some lending up to 100% loan to value on the purchased share.

 Shared Ownership Mortgages

Compare the shared ownership mortgages available in the UK and find the right deal for your new mortgage in minutes. We make it simple to search and compare the mortgage interest rates available for shared ownership homes whether or not you are a first time buyer.

The main advantage of shared ownership is that it can make getting onto the first rung of the property ladder affordable. Another great advantage of shared ownership properties is that they tend to be new or refurbished. In some areas, stamp duty on shared ownership property is waived if the shared ownership lease is granted by an approved qualifying body..

You will need a shared ownership mortgage to buy your share and a sum of money to pay for administration costs.

Shared ownership mortgages are offered by many mortgage lenders and if you are considering taking out a shared ownership mortgage you should seek specialist, no-commitment, shared ownership mortgage advice.

Affordablemortgages.co.uk can find the right Shared Ownership Mortgage for you. We will help you to compare the Shared Ownership Schemes available and make sure that the you can find the most affordable Shared Ownership Mortgage for you. We can also advise you on where you can find a Shared Ownership Property. Our service comes from years of experience, which guarantees that you will get the best possible advice

What deposit will I need for shared ownership mortgages?

You will be buying a share of the shared ownership property, for example a 25% share, let’s work on theoretical example;

Property Value £150,000

Share available 25% = £150,000 x 25% = £37,500 for you to buy at the start

Mortgage available 90% of £37,500 = £33,750

Mortgage required £37,500 – £33,750(mortgage avail) = Deposit required of £3,750

You should also keep / budget approx £1,500 – 2,500 for your legal & purchasing costs

What are the benefits of a shared ownership mortgage?

The main benefit of getting a shared ownership mortgage is that you get a foothold on the housing ladder and benefit from the increase to the value of your ‘share’.

Also these schemes are unique in that you can ‘staircase’ up your ownership of the property; meaning you have the ability to buy additional sections of the property at a later date. Therefore you can start off by buying 50% of the property initially, then in 2 years buy another 25% and finally the last 25% so you own the entire property. This saves you the cost of having to ‘size up’ during your working life. As you increase your ownership of the property your rent decreases to reflect the increased ownership.

How can Affordable Mortgages.co.uk help with Shared Ownership mortgages?

As shared-ownership is a niche mortgage sector not all mortgage lenders are willing to lend on these developments. We can find the right lender for you by sourcing the whole of the market.

Shared Ownership properties

If you have not found a shared ownership home to purchase or wish to find out more information on shared ownership schemes visit your local housing corporation website to learn more – typically via your council website eg Wakefield.gov.uk

Shared-ownership is a great way into home ownership and is the main affordable housing scheme. If you can’t afford to buy outright, you can part buy and part rent your home.

You might buy a 25%, 50% or 75% share in your home. You pay a rent on the share that you don’t buy normally set at an ‘affordable’ rate of, say, 3%. The bigger the share that you purchase, the less rent you have to pay. When you can afford to do so, you can buy more shares until you own your home outright in a process known as ‘staircasing’. If you already own a shared ownership house or flat and are looking to staircase to a higher share, or even full ownership, contact the Share to buy mortgage team for more information on stair-casing and remortgaging.

Housing Associations and shared ownership housing

The other share in a shared ownership property is usually owned by a ‘housing association’. Alternatively, some shared ownership homes are provided by house builders directly on schemes called ‘shared equity’. Most shared-ownership homes are found in the major conurbations but there are rural schemes available in some areas. You can find out more about shared-ownership properties by clicking here.

Some basic facts of shared ownership schemes

Shared Ownership Schemes are sometimes referred to as ‘part buy, part rent’, because that is just what the scheme allows you to do. You buy a percentage share in a property and then you pay rent on the remaining share that is owned by your housing association.

It is also possible to buy a small share in the property and then gradually increase your share in the property. This is called ‘staircasing’. Not all schemes work on this basis and there are many variations, such as an Open Market Home Buy and a Shared Equityscheme where no rent is payable. Your homebuy agent will be able to guide you accordingly.

What to consider when applying for a Shared Ownership Scheme

There are some things that you will need to have figured out and considered before applying for a Shared Ownership Mortgage.

» What share are you looking to buy in the property? This is in terms of the percentage that you want to buy in the property i.e.: 25%, 50%.

» What is the size of your deposit? You can go for a 100% mortgage and we have a team of people that can advise you on this process as some housing associations require you to have protection clauses in your mortgage.

» How much rent are you going to pay on the remaining property? This is determined by your income and working out how much you can borrow.

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