What is Shared Ownership?
BuyingMortgages
What is Shared Ownership?
Short answer:
Shared Ownership/Share To Buy are schemes designed to support first time buyers in entering the property market. Under this scheme, you would purchase a percentage of your home between 10% and 75%.
Long answer:
Shared Ownership are schemes that helps first time buyers embark on their homeownership journey. It means you have the option to purchase a percentage of your home and pay rent on the remaining percentage. While this option has its advantages and disadvantages, it ultimately depends on your individual circumstances and preferences.
Housing associations, local councils, and other organisations, commonly referred to as “providers” or landlords, offer shared ownership homes. It is important to note that all shared ownership homes, whether houses or flats, are leasehold properties.
Why buy a Shared Ownership home?
With Shared Ownership your mortgage will be less in comparison to purchasing a 100% share. Many first-time buyers opt to purchase 25% of a house, for a £200,000 house this means you only need to take out a mortgage for £50,000. In turn your mortgage repayments are lower. However, the remaining 75% will include a monthly rent. This is why it is important to consider the cost of mortgage repayments for a 100% share vs using a shared ownership option.
If you choose to purchase a smaller percentage your deposit will reflect the mortgage and it’s likely that you will only need to find 10% of the total mortgage price to purchase your new home.
In many cases, it is possible to gradually increase your ownership share until reaching 100% if you decide to do so. The cost of purchasing additional shares is determined by an independent valuation at the time of acquiring the further share.
What can I buy using the scheme:
Unfortunately, the scheme does not allow you to buy any property on the market. The scheme is limited to new build homes and homes that were new builds and have been resold by their current owners as a shared ownership property.
New build homes
A new build home is the most common type of Shared Ownership house. Developers who oversee large-scale new build estates often allocate a portion of the properties exclusively for Shared Ownership buyers.
Resale homes
Resale homes are homes that someone has bought through the scheme, has lived in, and is now ready to move.
Who is eligible for Shared Ownership:
The general criteria for qualifying for this scheme means you must meet all of the following:
- You need to be at least 18 years old.
- For areas outside of London, your annual household income should be below £80,000.
- If you live in London, your annual household income should be below £90,000.
- The scheme typically caters to first time buyers, if you already own another home, you must be in the process of selling it.
- It should not be financially feasible for you to purchase a suitable home for your housing needs on the open market.
- You must demonstrate that you are up to date with your mortgage or rent payments.
- You need to demonstrate a positive credit history (no outstanding debts or County Court Judgements) and the ability to afford regular payments and associated costs associated with buying a home.
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