Shared Ownership Mortgages
Shared Ownership Mortgage Advisors.
Our Mortgage Experts Online accredited advisors are specialists in shared ownership mortgages. Subsequently, our expert’s knowledge will help you to find the right shared ownership mortgages on the market to meet your specific requirements.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. As a first-time buyer this may feel completely overwhelming to you. Likewise, you may have no idea where to start. We can offer you guidance and help you navigate the complex world of shared ownership mortgages.
The brokers we work with are whole of market and offer completely unbiased advice, ensuring that you get the absolute best deal available.
Scroll down for more information and FAQ’s.
Updated 21st May 2021.
What is a shared ownership mortgage?
Shared ownership mortgages are part rent part owned properties. You will buy a percentage of the property and pay rent on the remainder. Furthermore, you will need to fit the criteria for the housing association you are purchasing from and will need to keep in mind that if you decide to sell the property down the line. Hence anyone trying to purchase it will also need to fit the criteria at that time.
To begin with, not all lenders offer shared ownership mortgages, our expert mortgage advisors will find you the best deal possible. You can buy a larger percentage of the property if your situation allows, for a shared ownership this is called staircasing. We will explain all about this in this article.
Generally, shared ownership mortgages are available on new build and preowned properties. As a rule, always check with the housing association regarding the maximum percentage you can purchase.
Shared ownership properties are always leasehold – so come with service charges, and for the time being, ground rent. However, new proposals from the government regarding ground rent may mean leaseholders will not need to pay it later this year
Shared ownership Help to Buy.
If you cannot quite afford the mortgage on 100% of a home, Help to Buy: Shared Ownership offers you the chance to buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share. Later, you could buy bigger shares when you can afford to.
You could buy a home through Help to Buy: Shared Ownership in England if:
- your household earns £80,000 a year or less of outside London, or your household earns £90,000 a year or less in London.
- you are a first-time buyer, you used to own a home but cannot afford to buy one now, or if you own an existing shared ownership property and are looking to move.
With Help to Buy: Shared Ownership you can buy a newly built home or an existing one through resale programmes from housing associations. You will need to take out a mortgage to pay for your share of the home’s purchase price, or fund this through your savings. Shared Ownership properties are always leasehold.
Only military personnel will be given priority over other groups through government funded shared ownership schemes, however, councils with their own shared ownership home-building programmes may have some priority groups based on local housing needs.
People with disabilities
Home Ownership for People with Long-Term Disabilities (HOLD) can help you buy any home that is for sale on a Shared Ownership basis if you have a long-term disability.
You can only apply for HOLD if the properties available through the other home ownership schemes do not meet your needs, e.g., you need a ground-floor property.
You can get help from another home ownership scheme called Older People’s Shared Ownership if you are aged 55 or over.
It works in the same way as the general Shared Ownership scheme, but you can only buy up to 75% of your home. Once you own 75% you will not have to pay rent on the remaining share.
Applying for a Help to Buy: Shared Ownership scheme.
To buy a home through a Help to Buy: Shared Ownership scheme you will need to contact the Help to Buy agent in the area you want to live.
How much can I borrow?
All residential mortgages are based on affordability. For instance, the main difference for shared ownership property is the rental payments will need to be included as a commitment when looking at how much you can borrow. Standard multiples are between 4-5 x income.
There are shared ownership calculators available online, also remember to factor in any ground rent and service charge.
To begin with, your mortgage expert will be able to tell you exactly what your borrowing potential will be.
How much deposit will I need?
The more deposit you have the better the options will be. This will be reflected in the interest rate offered by the lender. Ideally you will have a minimum of 5% deposit for your share. As an example,
£200,000 Property Price
£100,000 Mortgage (50% Share)
£5,000 deposit (5% of the mortgage amount)
Generally, there are a couple of options with no deposit, however this is very much down to your credit profile. As a result, rates are much higher with no deposit and some housing associations won’t allow this. If in doubt always checking with the housing association first.
The larger your deposit the more likely you are to be accepted by both the housing association and the mortgage lender.
Most shared ownership lender will allow a gifted deposit from family members, to read all about gifted deposit mortgages click here.
Service charge / ground rent on shared ownership property.
That depends on the terms on your lease, so check this carefully. Despite you only owning a proportion of the property, you may find you must pay most or all the service charge. The charges can vary each year, depending on factors such as maintenance and repairs. Normally, service charges are lower on houses and higher on flats, which have more communal areas that require looking after.
Currently, homeowners can also be responsible for paying ground rent. However, the government pledged to give leaseholders the right to extend the lease to 990 years, thus, meaning they will no longer have to pay the ground rent.
Shared ownership with bad credit.
There are less shared ownership mortgage providers. Therefore, if you have had previous bad credit the options are going to be limited. However, our mortgage experts are fully experienced in these types of mortgages, and as with clean credit homebuyers, the more deposit you have the better.
The type of bad credit and how recent it is will also be a factor. See our bad credit mortgages page for more information about bad credit mortgages.
If you have had previous bad credit, then the first thing you should do is get an updated copy of your credit report ready to provide to your advisor. Click here to access your latest report (link to credit report)
This is when you already have a shared ownership mortgage and need to take out a new shared ownership mortgage. There are several reasons to remortgage.
- Better rate of interest.
- Debt consolidation.
- Home improvements.
- Staircasing to purchase more percentage.
Shared ownership staircasing.
Normally, the minimum share you can originally buy is 25% but can also be up to 75%. When you remortgage you can look to purchase extra shares in the property, this is known as “staircasing”.
The more shares you have in the property the lower the rent you will pay to the housing association. Also, the more shares you have the more you will gain from an increase in equity.
The ideal aim of staircasing is to own the property out right, our experts will be able to give you the best advice for your circumstances.
Speak to a shared ownership mortgage advisor.
There are many lenders available ranging from high street banks and building societies to specialist lenders. We tend to find that most people go to their own bank, only to either find out they do not offer shared ownership mortgages, get declined, or cannot borrow what they need due to lender affordability. Remember, just because one lender has declined you, don’t give up!
Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. Furthermore, all of the mortgage brokers we work with are whole of market and offer independent, unbiased advice. They will have access to all the specialist lenders to really enhance your chances of you obtaining the mortgage you need.
The expert advisors we work with have experience in dealing with all aspects of shared ownership mortgages, and crucially use the whole of the market to access the best deals available.