Shared Ownership Mortgages
Introduced by the government, the shared ownership scheme is designed to help families on lower incomes on to the property ladder.
Shared ownership homes are provided through a housing association. You can buy a share from 25% to 75%, and then pay rent on the remaining share.
to learn more about Shared Ownership mortgages
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Shared ownership eligibility
Eligibility varies with each local housing association selling the property.
To purchase a shared ownership home your maximum household income must be less than £80,000 or less than £90,000 in London.
If you are self-employed you must be able to show 3 years’ accounts.
Shared Ownership is aimed at helping first-time buyers onto the property ladder and any eligible purchasers including second steppers, upsizers and downsizers. Applicants will be required to complete an affordability test pass credit history checks.
You should be in need of a shared ownership home, ie. You are unable to buy a home of suitable needs in the normal way.
You should have savings or access to at least £4000 to cover the costs of buying a home.
Shared ownership mortgages
Arranging a mortgage is the same as any other mortgage, although the market is limited as not all lenders offer shared ownership mortgages.
It is worth contacting us to research all available products on offer including Fixed and Discounted rates.
Important considerations
The deposit you pay is based on the mortgaged amount. So if the property is valued at £150,000 and you are buying a 50% share; you will need 5% of £75,000 = £3,750. For a 25% share, you will need £1,875
You can choose to pay Stamp Duty Land Tax (SDLT) on the full property value to or you can choose to pay based on the share that you are buying. If you choose the latter please review the details on the HMRC website. You would only consider paying stamp duty on the full amount if you were considering staircasing (slowly increasing your share to eventually own the property).
https://www.gov.uk/guidance/sdlt-shared-ownership-property
You will need to instruct a solicitor and pay all the usual fees when purchasing a home.
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For solicitors, we act as introducers only.
What is Staircasing?
Staircasing is the term used to increase your share of the home. Each time to increase you will need to have the property valued and instruct a solicitor. If you have not paid the full SDLT you may be required to pay again on the increased share. You will be required to pay all costs involved.
Selling a shared ownership home
You will need to contact your Housing Association to discuss selling your share. Even if you own 100% of the home the housing associate have first refusal to buy back the home for 21 years after you gained 100% ownership.
You will be asked to contact a surveyor to value your home and will need to pay for the valuation before proceeding.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
How to proceed
When you speak to us early in your house buying process we will be in a better position to proceed once you find your new home.
It would be helpful to have some figures to hand:
- your income
- any savings
- your outgoings
- how much you’re looking to spend.
We suggest getting an Experian Credit Report to ensure you have a good credit history, especially with a high loan-to-value mortgage.
We will then compare and source the most suitable deals for you by searching the whole of market with the aim of saving you time and money.
With our main office in Thame, our brokers are located all over the Home Counties so we’re never far from providing the help you need.
FAQs
for
Shared
Ownership
Mortgages
What is a shared ownership mortgage?
A shared ownership mortgage allows you to buy a percentage share of a property while paying rent on the remaining share owned by a housing association or provider. You take out a mortgage only on the share you purchase.
How does shared ownership work?
You purchase an initial share of the property, typically between 10% and 75%, using a mortgage and deposit. You then pay rent on the remaining share and may be able to increase your ownership over time through staircasing.
Who is eligible for shared ownership?
Shared ownership is usually aimed at first-time buyers or households with incomes below a set threshold. Eligibility criteria are set by the housing provider and may include local connection or employment requirements.
How much deposit do I need for a shared ownership mortgage?
The deposit is usually based on the value of the share you are buying, not the full property value. This often makes shared ownership more accessible for buyers with smaller deposits.
What is staircasing in shared ownership?
Staircasing is the process of buying additional shares in your shared ownership property over time. As you staircase, your rent typically reduces and may stop altogether once you own 100% of the property.
Can I sell a shared ownership property?
Yes, but selling a shared ownership property usually involves additional steps. Housing providers often have nomination rights, meaning they can try to find a buyer before the property is marketed on the open market.
Are shared ownership mortgage rates higher?
Shared ownership mortgage rates are usually similar to standard residential mortgage rates. Rates depend on factors such as loan-to-value, credit profile, and lender criteria.
Do I pay rent as well as a mortgage with shared ownership?
Yes. With shared ownership, you pay a mortgage on the share you own and rent on the remaining share. You are also responsible for service charges and maintenance costs.
Can I remortgage a shared ownership property?
Yes. Remortgaging is possible, but it often requires approval from the housing provider. Lender choice may be more limited compared to standard residential properties.
Is shared ownership right for everyone?
Not always. Shared ownership can be a useful route onto the property ladder, but buyers should understand the long-term costs, restrictions, and responsibilities before proceeding.
