Shared Ownership

What is Shared Ownership?

A shared ownership mortgage is a scheme that lets you purchase a percentage share of a property and pay rent on the rest.

The property doesn’t need to be a new build one (but typically they are) and you would usually be able to buy between 10% and 75% of the property’s value and pay rent on the remaining share to a housing association. Over time, you can purchase more shares in the property which would increase your mortgage payments but reduce the rental payments. This is called “staircasing”.

Deposit

A benefit of the Shared Ownership scheme is that your deposit is based on the shares you are buying, rather than on the full value. This means that many people can get on the property ladder with a smaller amount of money saved up for the deposit. For example, if you were to buy a 50% share of a house worth £150,000, your share would be £75,000. You would typically need a deposit of 10% which is based on the value of your share, which in this case is £75,000. So the deposit needed would be £7,500. If you were to buy the same house without the Shared Ownership scheme, then you would need £15,000 deposit.

This would mean your mortgage would be for £67,500. You would then pay rent on the other 50% share, to the housing association that owns the other half of the house.

Sometimes lenders only require 5% deposit (and occasionally, zero deposit).

For more information about deposits, see our blog here.

Who can get a shared ownership mortgage?

There are various criteria that need to be met in order to qualify for the scheme, but as a guide, the majority of first time buyers would normally qualify.

Pros & Cons

Like many things in life, there are positive and negative things to consider and you need to weigh up if Shared Ownership is right for you. We can go over these with you, but for more details on the criteria, you can click on the link below which takes you to the Share to Buy website.