Speak to an expert
0191 300 9124
In this guide, we explain what Shared Ownership Mortgages are and what factors to consider when qualifying for this type of mortgage.
For many aspiring homeowners, the traditional route of purchasing a property seems daunting. However, shared ownership mortgages can provide a solution to this problem.
Essentially, shared ownership mortgages allow multiple parties to hold ownership of a property, with each party contributing towards the deposit and mortgage payments. This can make the process of purchasing a property more manageable, particularly for those who may not have enough funds to buy their own home outright.
By sharing the costs, home ownership becomes a more affordable and accessible option. Understanding how shared ownership mortgages work can be complex, but with a little guidance and research, it could be the key to unlocking your dream of owning a home.
When it comes to buying a home, one of the biggest hurdles is often the deposit. Shared ownership mortgages are a type of mortgage that allows you to purchase a portion of a property while sharing ownership with another party, typically a housing association.
This means a smaller initial deposit, and you only need to take out a mortgage on the portion of the property you are buying. It’s a great option for those who may not have the means to purchase a home outright, as it allows you to work your way into homeownership over time.
Shared ownership mortgages can be complex, but with the right guidance, they can help make the dream of owning a home a reality for many.
This type of mortgage allows you to buy a portion of the property and pay rent on the remaining percentage.
Essentially, you're sharing ownership of the property with another party, which can be a great option for those just starting out, or those trying to get into the housing market in an expensive area.
It's important to note that you'll still be responsible for upkeep and maintenance on the property, but this can be a small price to pay for the opportunity to own a home that would otherwise be out of reach. Overall, share ownership mortgages can be a great choice for those looking for a more affordable way to become a homeowner.
Shared ownership is an excellent option for those looking to get onto the property ladder but can’t quite afford it on their own.
Here's an example of how shared ownership works:
Shared ownership mortgages offer a great way to get onto the property ladder. It means you can purchase part of a property and have lower payments than purchasing a home outright.
However, it's important to understand the pros and cons before applying for a shared ownership mortgage. Consider your eligibility, budget and requirements before making any decisions. Working with an experienced
Staircasing is the process of buying additional shares in a property. Usually, you can staircase up to 100% ownership.
When you staircase, your rent payments will be reduced accordingly. For example, if you buy an extra 10% share in a property, your rent bill will reduce by 10%.
It's important to remember that when staircasing, you will incur additional mortgage and legal fees. You should also consider the potential impact on your taxes – especially if you staircase to 100% ownership.
Lorem ipsum dolor sit amet consecte tur adipiscing elit semper dalar consectur elementum tempus hac.
Lorem ipsum dolor sit amet consecte tur adipiscing elit semper dalar consectur elementum tempus hac.
Lorem ipsum dolor sit amet consecte tur adipiscing elit semper dalar consectur elementum tempus hac.
To qualify, you typically need to have a household income of less than £80,000 per year or £90,000 a year or less when you’re buying in London, and cannot currently own a property.
You'll also need to demonstrate that you can afford the ongoing costs of homeownership, such as mortgage payments, rent, and maintenance fees.
A shared ownership mortgage can be a great way to get a foot on the property ladder, and our team of experts can guide you through the process to make it as smooth and stress-free as possible.
To obtain a shared ownership mortgage, you must first apply for the shared ownership scheme and get approved. This usually involves providing details about your income, budget, preferred location, and credit history.
After approval, you can proceed with the shared ownership mortgage application. However, not all lenders offer this type of mortgage, so it's important to double-check before applying.
To be eligible for a mortgage, you must provide information about your household income and credit history.
Essentially, this type of agreement allows you to purchase a portion of the property (usually between 25% and 75%) and pay rent on the remainder to a housing association or private developer.
There are several types of shared ownership agreements available, including the standard agreement, where you purchase a share in the property and pay rent on the rest, and the shared equity agreement, where you buy a share of the property and pay back the remaining equity when you sell.
- Joint Tenancy Agreement
If you're considering sharing a property with someone else, whether it's a friend or family member, it's wise to consider setting up a joint tenancy agreement.
This type of agreement can help to protect your individual interests and investments in the property. Essentially, a joint tenancy agreement is a legal contract between two or more parties who agree to share equal ownership of a property. This can provide a clear framework for how things will work in terms of responsibilities, costs, and decision-making.
It's important to ensure that you fully understand the terms of the agreement before signing, and to seek legal advice if necessary. With a joint tenancy agreement in place, you can enjoy the benefits of co-ownership of a property, while also safeguarding your own interests.
- Tenancy in Common Agreement
A tenancy in common agreement is a legal document that outlines the ownership rights of multiple individuals to a single property. This agreement is typically used when two or more people purchase a property together but do not want to own it jointly.
Instead, each owner has a separate share in the property, which they can sell, transfer, or mortgage. As a prospective tenancy in common owner, it's essential to understand the terms of the agreement fully. This includes your rights and responsibilities as a co-owner, as well as any restrictions on the use of the property.
In London, the government offers a scheme called Help to Buy, which provides support for homebuyers. If you can provide a 5% deposit, the government will offer a loan of 40% of the purchase price, while the remaining 55% can be obtained through a commercial mortgage lender. This scheme applies to new-build properties valued up to £600,000.
For areas outside of London, you may explore the Help to Buy: Equity Loan option. Under this scheme, the government can lend you 20% of the property value, and you can secure a 75% loan from a commercial lender, requiring only a 5% deposit.
If you are a council tenant or housing association tenant, you may have the opportunity to purchase your home at a discounted price through the Right to Buy scheme.
For individuals aged 55 and above, there is a scheme called Older People's Shared Ownership. This functions similarly to the general Shared Ownership scheme, allowing you to purchase up to 75% of your home. Once you attain a 75% ownership share, you will no longer be required to pay rent on the remaining portion.
Rated Excellent - 4.8 out of 5 on Trustpilot
.png){kind=logo}
Nicola was absolutely magnificent. She lined up the best mortgage offers based on the deposits I proposed, twice after I pulled out of the house I was initially buying. She kept me up to date and supported me throughout the entire process. Would highly recommend.
The experience as a whole was 10/10, Nicola has made this entire process so easy and painless. She assisted us every single step of the way and I couldn’t be more thankful. I would recommend Hello Mortgage to everyone.
We dealt with Nicola, throughout the process she was attentive, clear and timely with her advice and support. Great personal service.
Nicola was fabulous from start to finish. No question was a silly one and she was always great at getting back to me in a timely fashion. Nicola, 11 out of 10. You were brilliant and I thank you again for all the hard work you put into.
As a first time buyer the thought of going through the whole mortgage application was daunting. From start to finish Nicola was very helpful, keeping me up to date with every bit of the application. 10/10, I couldn’t have done it without Hello Mortgage
Our experience with hello mortgage couldn’t be any better. From our first meeting Nicola was really helpful explaining the whole process in detail (for 2 first time buyers this was great). Nicola kept in touch when needed and helped us a lot.
Having a 'consent to let' on one property and needing another mortgage, we weren't a straight-forward case, however, Nicola went above and beyond to find the best lender for our position, constantly communicating during the process. Would highly recommend!
Would highly recommend Hello Mortgage! 1st time buyers and Nicola went out of her way to ensure we were getting the best mortgage! She went over and beyond, even calling us back from home to discuss the mortgage offer with my partner when he came in from work. We will deffo be back when needed!
They kept me sane through everything. Was responsive, knowledgable and friendly with every query I had. I finally have my house, with the best mortgage rate and help I’ve ever received. If/when I ever move home I’ll be using Hello Mortgage again and I couldn’t recommend them more.
As a first time buyer, I was sometimes confused by the mortgage jargon but Dan explained everything perfectly, so I was always aware of what was happening and felt a real understanding of the process. If you are thinking about using a broker, I would not hesitate to recommend Dan.
Got remortgage in less than 5 weeks. The service from Hello has been outstanding from beginning to end; fast, efficient, mortgage rate, payments much better than expected, knowledgeable, honest advice and flexible appointments are just a few of the reasons I will definitely be using Hello Mortgage again.
Hello Mortgage
Net Promoter Score
Traditionally, shared ownership mortgages have required a deposit of around 5% to 10% of the share you are purchasing. For example, if you are buying a 50% share of a property valued at £200,000, you would need a deposit of £10,000 to £20,000.
When you decide to sell the property and its value has increased, you will share the profit with your lender (the housing association) based on the respective ownership shares. On the other hand, if the value of your property decreases, you may face the situation of needing to invest more money into a property that is losing value or potentially selling it at a loss. However, it's worth noting that declining house prices can present an opportunity for you to acquire a larger share in your home at a reduced price, which can work to your advantage.
Before undertaking significant refurbishments, such as installing a new kitchen or adding an extension, it is likely that your housing association will require approval. However, the positive aspect is that, similar to any lender, they are generally supportive of you investing in your home and are likely to grant permission. The downside is that if you later decide to purchase a larger share of your home, the cost may be higher. This is because the improvements you made to the property likely increased its value, which in turn affects the price of acquiring a greater ownership share.
Yes, it is typically possible to buy a larger share of your home at a later date through a process called staircasing. Staircasing allows you to gradually increase your ownership percentage in the property over time. By purchasing additional shares, you can eventually own a larger portion of the property, moving closer to full ownership.
