Shared Ownership Mortgage
- Expert guidance for first time buyers
- Help available seven days a week
- Personalised support at every stage of the process
Get in Touch
What is Shared Ownership?
If you can’t afford to buy a home all by yourself, you could consider the Shared Ownership scheme. With this, you buy a part of the home and pay rent on the part you don’t own to a landlord.
At first, you might buy between 10% and 75% of the home. But later, you can buy more if you want; this is known as staircasing. Sometimes, you can even buy the rest of the home so it’s all yours.
Who qualifies for Shared Ownership?
You can buy a home through Shared Ownership if both of the following are true:
- your household income is £80,000 a year or less (£90,000 a year or less in London)
- you cannot afford all the deposit and mortgage payments for a home that meets your needs
The scheme is not reserved exclusively for first time buyers.
You can buy a new build home or an existing home through a Shared Ownership resale scheme.
Find Shared Ownership properties on the Share to Buy website.
What deposit is needed?
Mortgages are available with as little as 5% deposit. The exact level of deposit needed will depend on your circumstances. You might need a bigger deposit if you have bad credit, for example.
Is it easy to get a mortgage on a Shared Ownership home?
Getting a mortgage on a Shared Ownership property isn’t more or less difficult than any other type of mortgage.
Not every lender will offer Shared Ownership mortgages, though. Those that do have might have special products available that are exclusively for those buying a Shared Ownership house or flat.
Your income and expenditure will still be assessed, along with your credit history. The only difference is, the lender will factor in rent and service charge payments to their affordability calculation.
What rent will be charged?
If you buy a new build Shared Ownership home, rent is capped at a maximum of 3% of the share owned by the landlord. Most charge a bit less.
Older properties work a bit differently. The starting rent will be set at the same level as the previous owner was paying.
Rent is usually reviewed once a year, and could go up.
If you buy more shares, your rent will go down because the landlord’s share is reduced.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Chat with our expert advisor
What’s the service charge for?
Shared Ownership homes are managed by housing associations. All Shared Ownership homes are leasehold, whether they’re houses or apartments.
Leasehold property owners often make payments to management companies, who maintain communal areas with those funds. This could include mowing grass in public areas, for example.
The service charge could also include your buildings insurance, which you have to have if you’re buying with a mortgage.
What is the process for buying a Shared Ownership property?
You need to apply to the Shared Ownership scheme before applying for a mortgage. The application process is free and available online. Once it’s confirmed that you’re eligible, you can then find a property to buy.
Estate agents sell homes on this scheme. The adverts will say how much of the home is up for sale, like 25% or 50%. They’ll also tell you about the rent and service charge.
Your affordability will be checked to make sure you can afford the mortgage and the rent payments, and you should be told the maximum share available to you.
If it’s a new build home, you might have to pay around £500 to reserve it. This means no one else can buy it for a while. If you don’t end up buying the home, you won’t get the fee back.
Can I buy 100% of my Shared Ownership home?
You can choose to buy more of the home when you can afford it. This is called ‘staircasing’. You can do it bit by bit until you own all of the home. Then, you won’t have to pay rent anymore – the home will be all yours.
But, some homes have rules about staircasing. Your share might be capped at 80%. This is to keep homes available on the scheme for others who might need them in the future. If you have bought an Older Persons Shared Ownership home, the maximum share you can own is 75%.
Your lease will tell you about the size of the share you can buy at any one time. For example, some Shared Ownership properties will let you buy an additional 10% or more, but not a smaller percentage.
If you want to buy more of the home, you might need a bigger mortgage. You’ll also need to pay for a surveyor to check how much the home is worth, and a solicitor to handle the legalities.
Check with your landlord to see if they’ll let you do staircasing. Ask them for the ‘key information document’ to check what share amounts you’ll be able to buy.
Unsure if you can get a mortgage?
Contact us now for a no-obligation chat.
Selling a Shared Ownership property
If you haven’t bought all of the home and you want to sell, you might have to offer it back to the landlord first.
Then, if an estate agent sells the home, they’ll say how much it’s worth and how much of it you own.
People who want to buy it must qualify for the Shared Ownership scheme.
Is it difficult to sell a Shared Ownership home?
It can be a bit more complex than selling a different type of property, but it isn’t impossible.
You’re a bit more restricted just because the pool of potential buyers is smaller. It might therefore take a little longer to sell than a normal home.
Can I rent out my Shared Ownership home?
In rare circumstances only. You might be able to rent out a room, but you should be living there at the same time.
You can usually only rent out the home if you own 100% of the shares or you have your landlord’s permission. Permission is usually only given in exceptional circumstances, such as if you’re a member of the armed forces and are serving away from home for a fixed period.
Who is responsible for repairs in a Shared Ownership house?
Generally speaking, you are, regardless of the size of share you own.
Some costs could be covered by a building warranty. This generally applies in the first ten years for new build homes, and typically only covers structural repairs. Older properties won’t typically have warranties.
Can I redecorate a Shared Ownership home?
Absolutely. You can paint, redecorate, and even replace the kitchen and bathroom if you want to.
Your landlord may need to give you permission if you want to make structural changes, such as adding an extension or converting a loft.
Do you have a question?
Are bills included?
No, you have to pay for things like gas, electric, and water separately.
Money paid to the housing association is for rent and leasehold costs only.
Can I be kicked out of a Shared Ownership home?
Not in the same way that a landlord can evict a tenant, but if you stop paying rent, the housing association could apply to the courts for a possession order. This can force you to sell your share of the property.
Pros and cons of Shared Ownership
Pros
- You can get a house for less money
- Gets you on the ladder if you can’t afford a property at full market value
- Can buy a bigger share in the future, with the potential to own the house outright eventually
- The share you own will go up in value if house prices increase
Cons
- All properties are leasehold so as well as a mortgage and rent, you will have to pay a service charge
- Buying further shares can be expensive
- There may be restrictions within the lease on what you can do to your property, i.e. you may not make structural alterations
- Can be harder to sell if you haven’t staircased to 100% as the pool of people who can buy it is smaller
How can The Mortgage Store Chorley help with Shared Ownership?
Ready to own a home, even if you can’t afford to buy all of one by yourself? The Mortgage Store Chorley is here to help with the Shared Ownership scheme! We know all about it and can make the process easy for you. Our team will guide you through every step, from applying for the scheme to getting the right mortgage.
Say goodbye to worries about buying a home – let us help you make it happen! Contact us today to get started on your journey to homeownership.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
