Shared Ownership Mortgages

Shared ownership mortgages are part of a Government scheme that aims to assist lower income households and first-time buyers purchase a property.

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Can we help with shared ownership mortgages?

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Shared ownership mortgages are part of a Government scheme that aims to assist lower income households and first-time buyers purchase a property. You can take out a mortgage for the share you own (usually between 25% and 75%), while you pay rent on the balance.

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How do I qualify for a shared ownership home?

You are eligible to buy a home through a shared ownership scheme if your household income is less that £80,000 (£90,000 in London). Shared ownership is only available to first-time buyers, those who’ve previously owned a home but can’t afford to buy one now, and existing shared ownership homeowners who want to move house. You will need to be able to prove you’re not in mortgage or rent arrears, that you have a good credit history, although we can still help you arrange a mortgage even if you have a Bad Credit profile, providing that you are accepted by Shared Ownership plan and you can afford the costs of buying a shared ownership home.

Military personnel will be given priority over other groups through government-funded shared ownership schemes. If you have a long-term disability, you could also qualify for a shared ownership scheme under the government’s Home Ownership for People with Long-Term Disabilities (HOLD). You can get help from another home ownership scheme called Older People’s Shared Ownership if you’re 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 won’t have to pay rent on the remaining share. Shared ownership schemes, which are offered by housing associations, allow you to part-buy and part-rent your home. The rent that you pay on the balance will be taken into account by the lender to make sure that this fits the affordability calculation.

Once you’ve passed the housing association’s financial checks, you’ll need to go through a similar process with a mortgage lender. You’ll go through all the normal stages of a mortgage application, including a detailed analysis of your income and outgoings, which helps the mortgage provider decide whether and how much to lend to you. However, when you’re buying a shared ownership property, two costs in particular will need to be factored in: the rent you’ll pay on the portion of the property that you don’t own, and the ground rent and service charges you’ll pay due to shared ownership homes being sold on a leasehold basis. These costs are unavoidable with shared ownership and could drag down the amount you could borrow if your monthly income is stretched.

Shared Ownership Mortgages Questions and Answers

Is it possible to buy a bigger share of my home at a later date?

Yes. Using a process called staircasing, you can keep buying chunks of the rented part of your home from the relevant housing association, until you own all of it.

How much you pay for additional shares will depend on the value of your home at the time – and this will be determined by the housing association. You’ll pay more for the share if your home’s value has increased and less if it’s decreased. This is something that you must understand when you are buying under the shared ownership plan because you would want to purchase the balance of the property as soon as your financial position allows you to.

Can I sell my shared ownership home?

If you achieve 100% ownership of your home, you can sell your property yourself. However, the housing association has the right to ‘first refusal’ for 21 years after you first purchased your home. This means it can choose to buy the property back before you sell it to anyone else.

You can sell your shared ownership property at any time, but the housing association also has the right to try to find a buyer before you put it on the open market. This is known as the ‘nomination period’. Nomination periods vary depending on the housing association. Some have very short ones, say 28 days, whereas other require eight weeks.

If you don’t own 100% of your home, the housing association can choose to find its own buyer.

Advantages & Disadvantages of Shared Ownership Mortgages

What are the advantages of shared ownership?

Providing you meet the eligibility criteria, shared ownership schemes can be a great way to get on to the property ladder and you may find you can buy a bigger home than you would have otherwise been able to afford.

What’s more, as you’re saving on rent, you may find you can afford to stash away some extra cash each month, which you can later use to increase your stake in the property.

It may be cheaper than renting (but not always)

What are the disadvantages of shared ownership?

Firstly, you might not qualify for a shared ownership scheme. But if you do, and you later sell up, you could find your hands are tied when it comes to who can buy your home, making it more difficult to get a quick sale. You’ll have to buy where the shared ownership properties are, which may not be your preferred location. You can’t buy just any property you want under the shared ownership scheme. Only properties that have been specifically built for shared ownership can be bought this way.

As you don’t own the property outright, you may have to seek permission from the housing association should you want to make improvements to it. As well as your mortgage and rent to the housing association, you might also have to pay service charges for the maintenance of the communal areas of your building (i.e. if you buy a flat in a block).

You might also find there are certain things you are not allowed to do in your shared ownership home such as let it to a tenant or get a pet. If you have a Bad Credit Profile you will find that we are limited to the lenders we can approach who would accept an application.

Getting a Shared Ownership Mortgage Needn’t Be Difficult. The mortgage marketplace in 2020 is constantly changing, with lenders looking for business, meaning their lending criteria is always under review.

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A fantastic service run by fantastic people. Always kept us updated a long the way from getting our mortgage offer all the way to completion, topped off by a lovely gift! Thank you Michael and Karen for everything you have done for us.
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Can We Help?

Not all lenders offer shared ownership mortgages but by using the services at ‘A Mortgage 4 You’ we have access to the whole of the market. With our experience and knowledge of the market we will source the best terms to suit you and your credit profile. If it can be done, we will find a lender to do it.

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How do I apply for a shared ownership scheme?

The Government offers a shared ownership scheme under its Help to Buy mortgage scheme, so a good place to start is your local Help to Buy agent. You can find your nearest agent at www.helptobuy.org.uk and they will be able to run through your options.

One of the main advantages to clients who have a Bad Credit profile is that the application is underwritten at 75% LTV with you contributing a 5% deposit, from your own resources, and the Government contributing 20%. Lenders are more flexible at this lower loan to value and the mortgage terms would reflect this.

If you live in a council or housing association home, you can apply for Social Home Buy. This is a scheme that helps you buy a share of the home you already live in and pay rent on the rest.

You will need to buy at least 25% of your home but you will get a discount of between £9,000 and £16,000 on the value of your property – depending on where you live and the size of the share you’re buying. If you choose to increase your stake in your home later on, again, you will get a discount. If you want to apply, ask your landlord for an application form.

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A MORTGAGE 4 YOU

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If you buy a shared ownership property, you’ll need a shared ownership mortgage for the proportion of the property you buy. You’ll typically need a 5% deposit, rather than the 10% required for most other mortgage deals.

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THINGS THAT WILL IMPACT YOUR CREDIT

Turned down elsewhere? We can help!

Whether you have been discharged 3 years or 12 months – it doesn’t matter, we can help.

We’ve been helping discharged bankrupts get back on to their feet and back on to the property ladder despite their circumstances. Arranging a bad credit mortgage or mortgage product for discharged bankrupts is a scenario we regularly deal with. Even if you have a history of bankruptcy and resposession we have access to whole of market lenders who will consider your application on various factors.

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