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Shared Ownership Mortgages

Welcome to our Shared Ownership Mortgage Hub! Whether you're just browsing or actively looking for shared ownership properties, we're on hand to help. Check out our guides or get in touch below!
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What is a Shared Ownership Mortgage?

What is a Shared Ownership Mortgage?

Pros and Cons of Shared Ownership Mortgages

Pros and Cons of Shared Ownership Mortgages

How to Qualify for a Shared Ownership Mortgage

How to Qualify for a Shared Ownership Mortgage

Shared Ownership Mortgage FAQs

Shared Ownership Mortgage FAQs
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What is a Shared Ownership Mortgage?

Shared Ownership Mortgages are designed to make homeownership more accessible. You buy a portion of a property – typically 25% to 75% – and pay rent on the remaining share, which is usually owned by a housing association. This model significantly lowers the initial deposit and mortgage required, compared to buying a home outright.

These mortgages are generally targeted at first-time buyers, people with lower incomes, or those who can’t currently afford to buy a home on the open market. To qualify for a shared ownership property, you have to meet the criteria here.

The primary benefit of Shared Ownership is its affordability and flexibility. It enables buyers to start with a smaller stake in a property and increase their share over time – a process known as ‘staircasing.’ This flexibility can make homeownership achievable and more manageable financially. Additionally, as you buy more shares, the rent on the remaining share owned by the housing association decreases.
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Is Shared Ownership a viable option for you?

How we can help you decide if a shared ownership is right for you:

  • Expert advice on the pros and cons of shared ownership
  • Access to over 120 lenders, some who are exclusive to brokers
  • Giving you the choice of the best deals and rates
  • All the info you need, in one place, from a trusted source
  • Personalised quotes and guidance at every step
These are just some of the reasons to get in touch if you are considering a Shared Ownership Mortgage. Read our handy guides above to learn more, or get in touch for a free assessment!
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How to Qualify for an Interest Only Mortgage

Navigating the qualification criteria for an Interest Only Mortgage demands a deep understanding of lender requirements. This mortgage type, while offering lower monthly payments, necessitates a rigorous evaluation of your financial situation and repayment strategy.

To be considered for a Shared Ownership Mortgage, there are several fundamental criteria you must meet:

  • you earn £80,000 a year or less in your household (£90,000 a year or less in London)
  • you can show that you are unable to afford a full deposit on a new home

You must also satisfy one of the below:

  • you’re a first-time buyer, over the age of 18
  • you used to own a home but can’t fully afford to buy another
  • you’re forming a new household – for example, after a relationship breakdown
  • you’re an existing shared owner, and you want to move
  • you own a home and want to move, but cannot afford a new home that meets your needs

It’s important to note that in some cases you may have to show that you live in, work in, or have a connection to the area where you want to buy the home.

Your financial background plays a significant role in your eligibility:

  • Credit Rating: A good credit history is essential as it affects your ability to secure a mortgage. Issues like rent or mortgage arrears can impact your credit rating.
  • Mortgage Requirements: You must obtain a mortgage for the share you intend to buy. Lenders will require documentation of your income and outgoings.
  • Existing Homeownership: If you currently own a home, you must be in the process of selling it and complete the sale by the time you buy the Shared Ownership home.

Certain groups and situations receive special consideration:

  • Older Applicants: Those aged 55 and above can access the Older Persons Shared Ownership scheme, allowing them to buy up to a 75% share.
  • Armed Forces Priority: Members and former members of the armed forces may receive priority in certain cases.
  • Self-Employed Applicants: If self-employed, you should present at least three years of accounts to prove a stable income.
Qualifying for an Interest Only Mortgage requires a thorough demonstration of financial stability, responsible credit management, and a clear plan for repaying the loan amount. Given the complexities and stringent criteria, it’s advisable to seek expert advice.

At Proper Advice, we specialise in guiding clients through this process. Contact us for a detailed consultation, where we can assess your situation and provide tailored advice to enhance your chances of securing an Interest Only Mortgage.
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Pros of Shared Ownership Mortgages

Shared Ownership Mortgages come with several advantages, particularly for those finding traditional routes challenging:

With the option to buy a percentage of a property (as little as 25%), the initial deposit and mortgage are significantly reduced.

You can increase your share over time through staircasing, making it a flexible option for those whose financial situation may improve.

These mortgages are especially beneficial for first-time buyers or those with limited savings, making homeownership more attainable.

Cons of Shared Ownership Mortgages

However, there are also important drawbacks to Shared Ownership Mortgages to consider:

You are responsible for mortgage payments on your share and rent on the remaining share, which can fluctuate.

Limitations on selling or altering the property can be restrictive compared to full ownership.

The process of staircasing to full ownership can sometimes end up being costlier and longer than initially expected.

Frequently Asked Questions

Eligibility usually includes criteria such as a household income of £80,000 a year or less (£90,000 or less in London), being a first-time buyer or a previous homeowner who can’t afford to buy now, or being an existing shared owner looking to move. Additionally, you must prove that you cannot afford to buy a home outright on the open market.

Yes, you can sell your share of the property. The housing association has the ‘first right of refusal’ to buy it back or find a buyer. If you own 100% of the property, you can sell it on the open market like any other home.

In addition to the mortgage on your share, you will also pay rent on the remaining share owned by the housing association. Other costs include a deposit, solicitor fees, mortgage arrangement fees, and potentially service charges and ground rent.

Staircasing allows you to increase your share of the property over time. You can buy additional shares in your home (usually in increments of 10%) based on the current market value. As you buy more shares, your rent decreases proportionally. This process involves getting a new valuation of the property, additional mortgage arrangements, and potentially legal fees.

If the property value increases, the cost of buying additional shares (staircasing) will be higher. Conversely, if the property value decreases, the shares will be cheaper to buy. The change in value also affects the amount you receive when selling your share.

You can make changes or improvements to the property, but for significant alterations, you may need to get permission from the housing association. These improvements can potentially increase the value of your home, which is beneficial if you decide to sell your share.

Priority for Shared Ownership properties is often given to local residents, key workers, or those with a particular need for housing in the area. Additionally, military personnel are given priority under certain circumstances.

Owning a share in a property can impact your eligibility for other mortgage products. If you fully staircase to 100% ownership, your situation becomes similar to that of other homeowners. However, partial ownership can limit your options for remortgaging or buying another property.

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