Shared Ownership Mortgages
A shared ownership property is a concept devised by the government to help people who do not have sufficient deposit funds to buy a home of their own. The basic idea is that a housing association or other semi-government organization builds the property. They sell part to the house buyer and charge a market rent on the balance. The home owner has the option to buy a larger part of the home as time goes on with the idea that at some stage they may own the whole property. The home buyer uses a mortgage and some of their own funds to buy the first portion of the ownership (Equity) and may use top ups to buy the rest as they can afford the repayments.
How much of the home will I own?
This depends on the scheme that you are entering. The usual proportion is between 25 and 50% There are special deals for some people such as emergency workers, nurses and teachers in London.
How do I get a shared ownership mortgage?
Almost all the major lenders provide shared ownership mortgages. Finding the best deal can be a complicated business so it is advisable to engage a specialist broker to find the best deal for your particular circumstances.
I do not have a deposit. Can I get a mortgage?
There are 100% shared ownership mortgages available but the rates can be quite high. You will still need cash to pay for searches, legal fees and other costs involved in arranging the purchase of your share of the home.
I am a first time buyer. Are there any special deals for me?
The whole concept of shared ownership was to help first time buyers get onto the property ladder. Some lenders give special rates some times, depending on their business plan. A broker will know about the best deals.
Can I get a fixed rate mortgage?
Yes, you can. You may also be able to arrange a tracker mortgage or get a discount on the lender’s variable rate for a few years.
I am self-employed. Can I get a shared ownership mortgage?
Yes, there are mortgages for self-employed people. You will have to provide proof of your income by supplying accounts and you may have to pay a slightly higher rate, but all other things being equal, you can get a loan to buy your share of equity in your home.
I know that a longer-term mortgage means lower repayments. How long can I get?
The usual term for a mortgage in the UK is 25 years but some lenders will offer a maximum term of up to 35 years, depending on your age.
Can I change lenders to get a better rate?
Yes, you can. You will need to get a valuation and prove that you are a good lending risk and can afford the repayments but there are usually good opportunities for re-mortgaging if you have a good track record as a borrower.