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Shared Ownership

With some clients struggling to find the large deposits that most lenders now require from a first time buyer,( 10% on average ) shared ownership is becoming more popular, as clients can start at purchasing only 25% of the property and renting the balance from the local authority or housing association.

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More About Shared Ownership Mortgages

Please note the following information is taken from https://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-scheme
Buying through shared ownership

You can get a shared ownership home through a housing association. You buy a share of your home (between 25% and 75%) and pay rent on the rest.

There are different rules in Northern Ireland and ScotlandContact your local authority to find out about buying a shared ownership home in Wales.

Eligibility

You can buy a home through shared ownership if your household earns £80,000 a year or less (or £90,000 a year or less in London) and any of the following apply:

  • you’re a first-time buyer
  • you used to own a home, but can’t afford to buy one now
  • you’re an existing shared owner

How it works

Shared ownership properties are always leasehold.

Older people

If you’re aged 55 or over you can buy up to 75% of your home through the Older People’s Shared Ownership (OPSO) scheme. Once you own 75% you won’t pay rent on the rest.

Disabled people

You can apply for a scheme called home ownership for people with a long-term disability (HOLD) if other Help to Buy scheme properties don’t meet your needs, for example you need a ground-floor property. With this scheme you can buy up to 25% of your home.

If you’re disabled you can also apply for the general shared ownership scheme and own up to 75% of your home.

Buying more shares

You can buy more of your home after you become the owner. This is known as ‘staircasing’.

The cost of your new share will depend on how much your home is worth when you want to buy the share.

It will cost:

  • more than your first share if property prices in your area have gone up
  • less than your first share if property prices in your area have gone down

The housing association will get your property valued and let you know the cost of your new share. You’ll have to pay the valuer’s fee.

Selling your home

If you own a share of your home, the housing association has the right to buy it first. This is known as ‘first refusal’. The housing association also has the right to find a buyer for your home.

If you own 100% of your home, you can sell it yourself.

More About Shared Ownership Mortgages

There is a massive choice of providers with Shared Ownership, from various Housing Associations, and the Local Authority. Each area maybe very different in terms of choice of providers, because with a strong demand some providers are running out of funds very early into the financial year. Doing your home work is a must, and it is worthwhile asking the local authority for a list of approved housing associations in your area. There are also some associations who are not tied geographically so you may have to undertake a little more research than you allowed for.

With shared ownership you will have the right to purchase the balance of the property at some stage, and you will also enjoy any rise in the property value should you decide to sell.

As mentioned you can purchase as little as 25% of the value of the property, with a normal maximum of 75% with rent payable on the balance. With regards to the mortgage to purchase your share of the property, we would normally expect you to find at least a 5% deposit, of your share of the property, which for most clients is affordable even in these difficult times. Yes you will have rent to pay on the balance but it is affordable housing and you are investing in your future.

You will have to apply to the local authority or housing association to be accepted before you can view properties, and having been accepted you should then be looking for a suitable mortgage product to suit you.

Shared Ownership is a good starting point for most first time buyers who want to get their foot on the housing ladder, but as in nearly all cases, you should look very carefully at the implications of buying into shared ownership, and make sure that it is right for you in the long term, as well as starting out.

If you would like to know more please call Michael J Alexander on 03452 605506. We are Independent Mortgage Advisers, with access to the whole of market, and all of the mortgage clubs, who offer unique plans only available to Intermediaries. With over 40 years of experience in financial services we have the knowledge and the sourcing systems to find the right product to suit you

 

There is a massive choice of providers with Shared Ownership, from various Housing Associations, and the Local Authority. Each area maybe very different in terms of choice of providers, because with a strong demand some providers are running out of funds very early into the financial year. Doing your home work is a must, and it is worthwhile asking the local authority for a list of approved housing associations in your area. There are also some associations who are not tied geographically so you may have to undertake a little more research than you allowed for.

With shared ownership you will have the right to purchase the balance of the property at some stage, and you will also enjoy any rise in the property value should you decide to sell.

As mentioned you can purchase as little as 25% of the value of the property, with a normal maximum of 75% with rent payable on the balance. With regards to the mortgage to purchase your share of the property, we would normally expect you to find at least a 5% deposit, of your share of the property, which for most clients is affordable even in these difficult times. Yes you will have rent to pay on the balance but it is affordable housing and you are investing in your future.

You will have to apply to the local authority or housing association to be accepted before you can view properties, and having been accepted you should then be looking for a suitable mortgage product to suit you.

Shared Ownership is a good starting point for most first time buyers who want to get their foot on the housing ladder, but as in nearly all cases, you should look very carefully at the implications of buying into shared ownership, and make sure that it is right for you in the long term, as well as starting out.

If you would like to know more please call Michael J Alexander on 03452 605506. We are Independent Mortgage Advisers, with access to the whole of market, and all of the mortgage clubs, who offer unique plans only available to Intermediaries. With over 40 years of experience in financial services we have the knowledge and the sourcing systems to find the right product to suit you

 

The overall cost for comparison is 5% APR. The actual rate available will depend on your circumstances. Ask for a personalised illustration.