What exactly is Shared Ownership?
Shared Ownership is a government approved scheme where you part-buy and part-rent your new home. It’s designed to help people who would find it difficult to buy a home outright, and who are at least 18 years old. The cost of your new home is divided – shared – with you taking out a mortgage for one share, which can be between 25% and 75% depending on your circumstances. You pay rent on the remaining share.
In the know
- You don’t have to be a first-time buyer, a key worker, or live in a council home to apply.
- In London, to be eligible for a Shared Ownership home, your annual household income needs to be less than £90,000.
- The mortgage will be either a Fixed Rate one – where the interest rate stays the same for the duration of the mortgage which gives you some certainty, or will be a Variable rate, that can go up or down depending on the movement of interest rates.
- You will need a deposit of 5-10% of the total price.
- Don’t forget to budget for costs like mortgage application fees and Stamp Duty. Check for any maintenance charges for your home. Although you own a share you’ll need to pay these charges on all of it.
Where do I find a Shared Ownership mortgage?
Not all lenders offer Shared Ownership mortgages but most of the major ones do. Just as with any mortgage there will be strict affordability checks by the lender.
Will my credit history be important?
You must not be in rent or mortgage arrears to be eligible for Shared Ownership, and you need to be able to demonstrate you have a good credit history with no County Court Judgements (CCJs) for example.
What happens if I want to own a larger share of my home in the future?
That’s perfectly fine, the Shared Ownership scheme is designed so that can happen. It’s called ‘staircasing’ and you increase your share as and when your circumstances change.