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Have you ever wondered what is a shared ownership mortgage? We explain all in this comprehensive guide. 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, our core services page is for you and will explain all the intricacies of what is shared ownership. Keep reading to find out what they are, how you can get one, the possible disadvantages of this loan, some of the most popular FAQs 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 as a deposit. 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, building developers, 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, especially with recent increases in house prices.

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 £4,000 to cover the costs of buying a home, including legal fees, processing etc.

If you 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 and thoroughly explain what does shared ownership mean. For more detailed ams: specialist shared mortgage services, please visit our shared ownership mortgages page.

What is shared ownership, and can I increase my share in my shared ownership home?

Yes, you can increase your share, sometimes until you own 100% of the property. But what is shared ownership? This definition 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. The staircasing process allows you to gradually increase your equity in the home over time. By purchasing additional shares, you reduce the percentage of the property owned by the housing association, ultimately leading to a higher level of homeownership. This can be done through either buying additional shares in increments or purchasing the remaining shares outright, ultimately leading to full ownership of the property.

As you acquire more shares, your monthly rent payment to the housing association will typically decrease, reflecting your increased ownership. Staircasing offers shared ownership homeowners the flexibility to increase their stake in the property as their financial situation improves or their needs change.

What advantages do shared ownership mortgages offer?

Here are just a few examples of the advantages:

  • With Shared Ownership, you can embark on homeownership with a balanced approach, ensuring long-term stability without overwhelming yourself during the initial phases of property acquisition and career advancement.
  • In shared ownership, the deposits are generally more affordable than those required for buying properties on the open market.
  • With Shared Ownership, mortgages become more attainable, catering to individuals with lower income levels.
  • 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 working out what is a shared ownership mortgage and have been told you can’t get a mortgage because of your credit history contact us to see if we can help. We have a saying at ams: If we can’t help it’s not possible!

Conclusion on getting a shared ownership mortgage

Although obtaining a shared ownership mortgage can present challenges, there are numerous options and paths available to explore. For expert guidance regarding your mortgage options and clarifications on “what does shared ownership mean”, feel free to contact us at ams: 0121 4000 052 or reach out to us today.