Shared ownership is a way of part-owning, part-renting a property and designed more for people who can’t afford to buy a home outright.
It is available through housing associations and there are both government-backed and privately-operated schemes.
With shared ownership, you buy a stake between 25% and 75% of the market value of your property with a mortgage and possible deposit. You pay rent on the remaining share of the property, which is owned by the local housing association.
The rent payable can be up to 3% of the association’s share of the property value. Shared ownership properties are leasehold properties, meaning you will own the lease on them for a fixed period of time, typically 99 years. There will also be a service charge for the property, which is usually paid monthly, but not always.
Here at Blue-print Mortgages, we know which lenders offer shared ownership deals and will endeavor to get you the best rate. You may be looking to borrow 100% of the share you are purchasing and there may be restrictions on new-build property. The more deposit you have the better mortgage deal you will get. Don’t be led to believe you have to use the mortgage advisors recommended by the housing association, as we have access to the whole of market and we will not charge you a fee for our advice. Unlike many of our competitors, we will not charge a fee for our mortgage advice services, even if the case does not complete.
Shared ownership schemes offer you the option to buy extra shares in the property if you should wish to, as and when you can afford it. This is known as staircasing. This is done by paying the housing association to carry out a valuation of the property and arrange a mortgage to buy the extra share.
You can sell your shared ownership property at any time but the housing association has a right to find a buyer for the property if they still own a share and to buy it back. If you should buy the property through Social HomeBuy and sell it in 5 years, you’ll have to pay back all or some of the discount.