What is a Shared Ownership mortgage?

Shared Ownership mortgages are a government scheme which are primarily focused on helping people to get onto the property ladder. Between 25% and 75% of a property is usually bought from a housing association or house builder. This allows you to take out a smaller mortgage, with a lower deposit. And you will then pay rent on the remaining part.

A possible option for those people is a Shared Ownership scheme – whereby the `homeowner` part owns and part rents the property. This enables people to have lower mortgage repayments to make each month. Albeit there is still the monthly rent to take into consideration, and over time allows you the option to buy off the `rented` part of the property if desired.

What criteria do I need to meet in order to qualify?

There are several requirements which must be met. This includes a maximum household income of £80,000 per year or £90,000 if you live in London.

You will currently need to be one of the following:

• A first time buyer.
• A previous homeowner who cannot afford to buy now.
• Renting from a housing association or the council, or have a long-term disability.

Finally, you will need to live in the property and you cannot rent it out fully or partially.

How does Shared Ownership work?

If you fit the criteria and are thinking about buying a Shared Ownership house, you’ll first need to check that the property you are looking to buy is included in the scheme. Speak to the house builder or federation to do so.
You will also need to speak to various lenders and ensure that they are willing to offer you a mortgage.
Using a mortgage advisor who understands the market can make the whole process much easier.

Can I remortgage a Shared Ownership property?

Yes, you can get a Shared Ownership remortgage, as it’s like a conventional mortgage. As you were only being lent money against a percentage of the property rather than the whole property. It’s only the portion of the property’s value that you can claim that you will be remortgaging against.
The only difference when compared to a standard mortgage is that Shared Ownership Mortgages are only available via selected lenders.
Before remortgaging, you’ll also need to check with the housing association who you share the ownership with.
If you are not sure about how much you can borrow, why not try our free Shared Ownership calculator.

How are Shared Ownership Mortgages different?

A main difference is that the deposit required is only for the part that is to be borrowed. So, for example, in a £200,000 property you are looking for a 50% stake, a 10% deposit required would be £10,000. A ‘regular’ 90% LTV mortgage to buy the property outright would be twice this amount at £20,000.

Another difference to a standard mortgage is a process known as `staircasing.` This allows you to buy more of your home from the housing association or house builder. You will obviously need to prove you can afford it, but this is a great way to take full ownership of your home.

There is also a difference when you come to sell. If you have purchased the entire 100% of the property, you can sell it yourself. However, the housing association usually has the right of refusal for the first 21 years after you have bought your property. If you do not have full ownership of your property, the housing association will have the right to find their own buyer initially.