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What Is A Shared Ownership Mortgage?

What Is A Shared Ownership Mortgage?

What Is A Shared Ownership Mortgage?

If you want to get a foot on the property ladder but cannot afford to pay the full deposit to buy the property outright now, then a shared ownership mortgage may be the solution for you. Typically, this type of mortgage requires a smaller initial deposit, while allowing you to move towards owning your own home. Whilst it is more difficult where you have issues with your credit and remember “If we can’t help at ams: then it’s not possible”

If you want to know more about shared ownership mortgages, this post is for you. Keep reading to find out what they are, how you can get one, the possible disadvantages of this loan, and more.

What is a shared ownership mortgage?

A shared ownership mortgage is a government scheme that allows individuals to buy a part of a property when they cannot afford to pay the entire amount. Ownership can start at just a 25% share of the property while having to pay only 5% of the mortgage. You would then pay rent towards the rest. 

These mortgages are also known as ‘part buy, part rent’ mortgages and are offered by housing associations, trusts, or co-operatives. They are particularly aimed at first-time homebuyers, as saving up a big deposit and paying the full price of a property can be very difficult.

How can I get a shared ownership mortgage?

To start with, you should generally be a first-time buyer in order to qualify for a shared ownership mortgage. If you do already own a property, you should be in the process of selling that property.

Next, your household’s annual income must be less than £80,000 (or £90,000 in London). You also need to have enough money for the deposit, which, as previously mentioned, will be from 5% (and up to 10%) of the equity share that you are purchasing. Lastly, you need to have approximately £4000 to cover the costs of buying a home, including legal fees, processing etc.

If you would think that you qualify for a shared ownership mortgage and would like to know more, contact us today. Our specialist advisors are always available to help you find the right mortgage for your circumstances.

Can I increase my share in my shared ownership home?

Yes, you can increase your share, sometimes until you own 100% of the property. This depends on the housing association, as some do not allow 100% ownership. 

In order to increase your share, you must have been living in your shared ownership house for a set period of time. You can then do what is known as ‘staircasing’, which means that you are buying more shares in the house. Your rent amount will simultaneously decrease as you own more of the property.

What are the advantages of shared ownership mortgages?

  • Shared Ownership allows you to get on the property ladder, offering long-term stability without overstretching yourself in the early years of home ownership and career
  • Deposits are generally lower than buying on the open market.
  • Shared Ownership makes mortgages more accessible, even if you’re on a lower wage.
  • You can get a bigger house for less outlay
  • It can still be done where you have issues with your credit file

Remember, if you are looking at shared ownership and have been told you can’t get a mortgage because of your credit history contact us to see if we can help

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