Shared ownership is just one of the ways that UK residents can get onto the property ladder with less. While it’s not a perfect buying scheme, it can help many get up onto the property ladder. Once on it, you have more options.

For example, you can own 25% of a property through shared ownership. In a few years, when you sell it on, that 25% (if you’ve paid it down significantly) can act as a deposit on a standard property that you own outright.

If you have done the research and have decided that shared ownership is right for you, then the next step is to get a mortgage. What is a shared ownership mortgage, how is it different, and how do you get it? All those questions and more will be answered in this guide, so let’s get started:

What is a Shared Ownership Mortgage?

What’s shared ownership mortgage? Technically, it’s a standard mortgage. The shared ownership part is different on the housing association’s side of things. The mortgage you take out, on the other hand, is a standard repayment mortgage. This means that you:

• Put forward a deposit
• Pass affordability checks
• Get the property share evaluated
• Sign and complete your mortgage offer.

The mortgage, in this case, is just for a lower amount. If a property is on the market for £400,000, and through shared ownership you buy 25% of it, then you only need a mortgage to cover that portion.

In this example, say you put £10,000 down as a deposit. You then only need a £90,000 mortgage to buy the property.

You can increase mortgage loans as time goes on. With the shared ownership scheme, this is known as staircasing. You have the right to eventually work your way up to buying 100% of the property if you so wish. Otherwise, you can sell just your share to another buyer.

Can I Get a Shared Ownership Mortgage?

You can absolutely get a shared ownership mortgage. Since the amount you need to borrow is far less than a whole property, conditions like income requirements and even deposit requirements are far lower.

This makes buying a share accessible to many people, especially in cities like London, where buying 100% of a property at once is out of reach.

How Do I Get a Mortgage for Shared Ownership?

So, how to get a shared ownership mortgage? If you’re ready to move forward on a shared ownership property, then it is crucial you know how do I get a mortgage for shared ownership and the steps involved.

While yes the mortgage itself just covers your portion, it is important that you provide proof of participation in your application. It’s also important that you connect with lenders who understand the shared ownership scheme.

That’s why it’s so important to go to an independent mortgage broker and advisor. Not only can they explain how to get a mortgage on shared ownership property, but they can help connect you to potential lenders who understand your situation and know how to factor in the shared ownership scheme into their affordability checks.

How do Shared Ownership Mortgages Work

How does a shared ownership mortgage work, exactly?

With shared ownership, you buy a share of the ownership of a property, and a housing association owns the rest.

You pay rent on what you don’t own.

Now, with shared ownership, you have more maintenance responsibilities than if you were to rent outright. You are responsible for internal repairs, for example. Similarly, you may need to pay an additional service charge for the maintenance of the external areas.

The mortgage itself just covers the share you have purchased. If you want a larger share, then you’ll need to buy that share at the market rate from the housing association. You can usually increase your mortgage to accommodate this share rather than needing to take out a second loan.

Who Does Shared Ownership Mortgages

Many lenders offer shared ownership mortgages. Get in touch with independent mortgage brokers to find the ones willing to offer you a mortgage deal,

Frequently Asked Questions

·         Do you pay rent and mortgage on shared ownership?

Yes, you pay both rent and a mortgage with the shared ownership scheme. However, since rent needs to be below the market rate, and you can lock in interest rates and pay off your mortgage, you should pay less overall per month than if you were renting the property on the open market.

·         Why won’t the housing association let me staircase?

Each housing association is different. While you have a right to staircase, the association may cap how much you can staircase at any given time, as well as how frequently.