Shared Ownership Mortgages: What You Need To Know

Shared ownership mortgages and schemes are where you own a percentage of the property and either the government, a developer or a housing association retains control of the remainder, renting it to you at a reduced rate.

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What Is A Shared Ownership Mortgage & How Do They Work?

There’s no need to wonder how shared ownership mortgages work… this guide has all the information you need to decide if it’s the right path for you to take, covering the pros and cons and how to go about applying for one.

These products work alongside shared ownership schemes and provide the capital to buy the rest of the property. It may seem confusing at first but it can help first-time buyers, people on low incomes and people currently renting council houses take that first step onto the property ladder.

If you want to find out more about what shared ownership mortgages mean and what’s involved, get in touch with Create Finance today.

How To Get A Shared Ownership Mortgage

You need to register for shared ownership with the Help to Buy agent where you live and then you can begin searching for available properties included in the scheme. A financial assessment is carried out by your housing association to judge mortgage affordability and what monthly rent you’ll need to pay.

Now you can start looking for a shared ownership mortgage. Note that not all lenders provide these products, which is why it can be beneficial to make use of a specialist mortgage broker who will be able to provide you with the necessary advice and guidance on these mortgages.

It can be helpful to check your credit score before applying so you know that there aren’t any previous debts or mistakes in the paperwork that could affect your chances of approval.

For further help or advice relating to how you can apply for a shared ownership mortgage, the Create Finance team is on hand to answer any and all questions you may have.

Think carefully before securing debt against your home, your home
may be repossessed if you do not keep up repayments on your mortgage.

FAQ's

Can You Get A Shared Ownership Mortgage With Bad Credit?

Yes, it is possible to get a shared ownership mortgage with bad credit, although it can be more difficult. It can be helpful to speak to a broker with in-depth knowledge of the market so they can find you a specialist mortgage lender that is likely to accept you.

What Deposit Do I Need?

Shared ownership mortgages are good options for those who can’t afford 100% of the cost of a property and who are unable to save up a big deposit. Typically, a deposit of between 5-10% of the share being purchased will need to be provided by the buyer.

In order to be eligible, you will need to be a first-time buyer or not currently a homeowner. Your combined household income must also be less than £80,000 a year (£90,000 in London).

Do You Pay Rent With A Shared Ownership Mortgage?

With these schemes, you buy a share of between 10% and 75% of the value of your home, with the rest owned by the developer or a local housing association. Each month, you pay what you owe on your mortgage for the part of the house you have purchased, as well as rent on the share that you haven’t.

There may be other associated costs as well, such as annual ground rent and monthly service charges, since shared ownership homes are typically leasehold.

How Do Shared Ownership Mortgages Differ To Standard Products?

There are various key differences between shared ownership mortgages and more traditional options. While shared ownership mortgages may not be easier to get, they help people with limited financial means get on the property ladder.

Only a certain percentage of a property is purchased, rather than an entire house, which means payments are a combination of rent to your landlord and mortgage payments to your lender.

Shared ownership mortgages are also potentially more expensive than standard mortgages because lenders are likely to see you as higher risk. Rates can also be higher because not all lenders will lend on shared ownership homes.

Think carefully before securing debt against your home, your home
may be repossessed if you do not keep up repayments on your mortgage.

Whatever your background or circumstances,
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The overall cost for comparison is 4.8% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

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