Shared Ownership

Yes, typically shared ownership mortgages are more expensive than standard mortgages due to the following:

• Increased administration involved with the scheme.
• They are deemed as higher risk by the lender.
• Not all lenders offer them.

However, even factoring in the additional expense, a shared ownership mortgage can provide a great opportunity to get on or move up the property with little deposit.  Even considering the rent that you pay for the share that you do not buy and the service charge, it can work out cheaper than privately renting.

In the future, if you choose to staircase up and buy 100% of the property you will then be able to remortgage this onto a standard mortgage deal.

Yes, with a shared ownership property you’ll pay rent and service charges to the landlord on the part of the property that you do not purchase.

The rent payable will need to be factored into your affordability when we calculate your mortgage borrowing.  There will be an agreement in place between you and the landlord stipulating how much and when the rent is due, also, how much the service charge is and what is included.

In the future, if you own 100% of the property, no rent will be payable to the landlord.  Due to shared ownership properties being leasehold, a service charge will be payable.

Getting a mortgage with shared ownership is a very similar process to a standard application although the rent you’ll pay plus any service charges/ground rent will be considered.  They are not considered as difficult with a good shared ownership mortgage broker on your side.

To get a mortgage with shared ownership we’ll need to consider:

• Your income including the stability, amount, and regularity.
• Existing credit commitments such as personal loans, car loans, credit cards etc.
• Account conduct, your credit score will be assessed.
• Affordability, how much spare income you have left over per month.
• Your dependants, how many people are relying on your income such as children.
• The amount of deposit you must put down, the more you can put down, the cheaper your mortgage payments will be.

Shared ownership mortgages can be complicated, therefore, having a specialist mortgage broker by your side can prove invaluable.

Yes, banks will lend on shared ownership, however, not all of them.  Shared ownership mortgages are specialist lending, therefore, not all banks offer them.

The good news is that a lot do including some big high street lenders. There are also options available in the marketplace for those who have bad credit, a CCJ, or are self-employed.

All banks will have their own rules and criteria surrounding shared ownership mortgages therefore, which one will be best will be based on the property you are buying, the area, the share you are purchasing, and your personal situation.

If you cannot afford to buy a share of the property with savings, then, yes, you’ll need to pay a mortgage with a shared ownership property.

If you can afford to pay for the share of the property with your savings, then you don’t have to get a mortgage.

If you require a mortgage, you’ll pay this along with service charge, ground rent, and a share of the rent per month.

We think so, for the right individuals shared ownership is a great way for both first time buyers and home movers to buy a property without a large deposit.

Saving for a deposit can be difficult and take a long if you are currently renting or paying a mortgage.

The deposit required is a minimum of 5% of the share you are buying and not the full market price, for example, if you were buying a 50% share of a property worth £200,00, you’d need a minimum of £5,000 deposit. Without the scheme, this would have been £10,000.

If you can afford to buy a property that meets your family requirements without the scheme then you wouldn’t be eligible.

Yes, if you can afford it, you are able to ‘staircase’ up and buy a bigger share in your property in the future.   There will be terms and conditions about how much you can buy and when by your landlord.

To raise the money to buy the additional share you can use either a further advance mortgage from your existing lender, a remortgage if you are no longer tied into a deal, or a secured loan.

There isn’t one!  There is no minimum income for shared ownership however, if you require a mortgage, you’ll need to pass your lenders affordability assessments.

There is a maximum household income you can earn to be able to qualify for the scheme, the amount will vary depending on where you live.

The downside to shared ownership is that it can be expensive monthly as you must factor in your mortgage payment, ground rent, service charge, and rent on top of your other outgoings such as life insurance, home insurance, energy bills, council tax etc.

In the future, if you choose to buy a bigger share, the amount of rent you’ll pay will reduce.

You’ll increase your chances of being approved for a shared ownership mortgage by using a mortgage broker.

A mortgage broker will run through your income and expenditure and let you know how much you can borrow on a mortgage and how much your payments will be per month.

If you have conducted your finances well such as been up to date with payments, not going over your overdraft, earn more than you spend, don’t have lots of gambling transactions, and have good credit, this will increase your chances of being approved for a shared ownership mortgage.

No, you’ll need to put down a 5% deposit for a shared ownership mortgage, however, it’s 5% of the share you are buying.

100% mortgages for shared ownership properties are not available, the highest loan to value deal on the market is a 95% shared ownership mortgage.

The deposit for a shared ownership is smaller than that with a regular mortgage as it is based on the part you are buying and not the full market value of the property.

Whether shared ownership is better than renting will depend on your personal situation, it’s not for everyone.

If you are currently renting, the advantages of shared ownership are:

• You’ll only need a 5% deposit calculated on the share you are buying.
• You’ll be able to afford a bigger property using the scheme.
• Rent can be ‘dead money’, so you’ll be benefiting from your share of house price increases.

For renters, the disadvantages can be:

• You’ll be responsible for the maintenance and upkeep of the property.
• You’ll still need to pay rent on the share of the property that you are not buying.
• There will be a ground rent and service charge to pay.
• They can be harder to sell down the line.
• The interest rate that you’ll pay on your mortgage will be slightly higher than with a regular deal.