In plain terms, shared ownership is something that is primarily targeted at first-time buyers and is a combination of buying and renting a property. This makes it possible for you to invest in a first home that you might have previously thought was unobtainable.
How does it work?
In England, shared ownership entitles you to between 1/4 and 3/4 of a property's market value. The remainder is then subject to rent payments at a rate decided by the scheme’s provider.
It's important to keep in mind that the property will be leasehold if you use a shared ownership scheme.
The Shared Ownership programme offers a part-buy, part-rental approach to property ownership with a lower down payment. You buy the property for between 25-75% of its market value and then pay subsidised rent on the remainder. A deposit equal to at least 5% of the share purchased will also be required.
Mortgages for Shared Ownership
You'll also need to apply for a shared ownership mortgage to cover the amount you want to borrow if you don't have the funds on hand.
You might need to shop around though, as not all lenders provide these mortgages. The easiest way to do this is to contact a mortgage adviser who can search 1,000s of mortgage products for you and find the best option to suit your personal circumstances.
As a general guideline, you'll normally need a 5% deposit for these mortgages, though the deposit rates required can vary.
Who is eligible for Shared Ownership?
Below are some of the most typical qualifying requirements for shared ownership which might vary depending on the provider and property:
- Your combined yearly income must be below £80,000 to be eligible for the Shared Ownership scheme.
- You do not currently own a home.
- You must be at least 18 years of age.
- You must have proof you’re not in mortgage or rental arrears.
- You have a good credit history.
- You’re not able to purchase a home suitable for your needs on the open market.
