Shared ownership
the affordable way of getting on the property ladder - designed to help you get your foot in the door.
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SHARED OWNERSHIP WITH MORTGAGE LIGHT
Looking to get a home through Shared Ownership? Get in touch with our team.
HOW SHARED OWNERSHIP WORKS
Shared Ownership helps you to make that all-important first step onto the property ladder. It is the most common affordable purchase option. Quite simply, you purchase a share of a property with the remaining proportion retained by a Housing Association who then charges you a monthly rent. Think of it as a cross between buying and renting a house.
Share values vary, but most commonly you can purchase between 30-50% of a property. Once you have owned your share for a fixed period of time, you can ‘staircase’ out and buy further shares, enabling you to own more of the property.
By owning a larger percentage of the property it means that the Housing Association owns a smaller percentage and consequently the rent you pay them decreases. Eventually, you will be able to staircase out to the full 100% share and this would mean you will not pay any rent.
Here's an example...
Mr and Mrs Patel have a combined income of earns £52,000 a year and are currently renting. They have no loans, credit cards or student loans and have a clean credit history. Mr and Mrs Patel want to get on the property ladder but need a little financial help.
They found a Shared Ownership property for £157,500. The full market value of the property is £350,000, of which 45% can be bought and the remaining is owned by the Housing Association. They will need to pay £441 in rent and a £30 service charge..
He approaches us here at Mortgage Light to help him find the right mortgage deal.
To purchase the 45% share, Mr Smith wanted to put down a minimum deposit of £7875 (5% of £157,500), £2,000 to cover his solicitor fees and £595 for using Mortgage Light’s services. In this case, he does not have any valuation fees. The total upfront amount Mr Smith needs to find to buy shares in this home is £10,470.
The monthly cost Mr and Mrs Patel will pay for both the mortgage and the rent payments to the Housing Association came in cheaper than renting. There are also other options where currently you don't need deposit money!
HOMEOWNERSHIP FOR EVERYONE
Why use shared ownership?
01
Shared Ownership can help those with lower incomes who might be struggling to save for a 10%+ deposit full market value to get on the housing ladder
02
You are able to buy with zero deposit money depending on the housing association.
03
You can start with as little as a 10% share in the property in many cases - new build only. You’ll need to have a financial assessment to work out your sare size, the Housing Association will make you maximise your share.
04
You can benefit from any rise in house prices, as the value of your share in the property should rise too.
05
Shared Ownership can be cheaper than renting, plus your monthly payments will be going towards paying off your mortgage.
06
You may be able to purchase a bigger house than you would have been able to if you were buying outright.
07
The rent associated with Shared Ownership is generally less than the rate charged on the open market and is usually charged at 2.75% of the property value per annum.
08
Stamp Duty Land Tax can usually be deferred until your share reaches 80%.
09
Shared Ownership properties can often be found in private developments and a certain number of Shared Ownership homes will often be required as a part of the planning permission for a development. This can help to put affordable housing in the heart of sought-after areas.
HOMEOWNERSHIP FOR EVERYONE.
10 ways first time buyers are getting on the property ladder
As a first-time buyer, there are a number of mortgage products designed to help make homeownership more accessible - particularly if you’re struggling to build up a large deposit.
Low deposit mortgages
Where some lenders will accept deposits as low as 5%, depending on your credit profile and income.
Higher income multiples
Available to applicants with strong rental histories, a high salary, or professional qualifications, often more accessible when you have a larger deposit
Cashback mortgages
A fixed sum back upon completion to help with initial costs - normally linked to new build homes.
Shared ownership
Where you buy a share of a property and pay rent on the remainder – with the option to purchase more shares over time.
Builder or developer incentives
Often offered on new-builds to reduce your upfront costs - there are often ways to work directly with the developer to tailor the deal and explore additional mortgage options.
Joint borrower, sole proprietor mortgages
Sometimes called “income booster” - allowing a parent or family member to support your income without being named on the property
Zero deposit (100%) mortgages
Available in specific circumstances – such as where you've been renting for a period of time and can show a consistent payment record. These are subject to stricter eligibility criteria and affordability checks.
Looking to get more information on your first mortgage?
SHARED OWNERSHIP GUIDE
Step by step guide
Mortgage process
- Contact Mortgage Light to be qualified. Your affordability needs to be assessed for each property you are interested in as every Housing Association has different rent/service charge amounts. These can all affect affordability
- Set a time to meet or speak to Mortgage Light
- Provide requested documentation to enable Mortgage Light to provide an AIP/DIP
- Once you have been approved by the Property Provider / Housing Association, you will need to pay your reservation fee, then discuss mortgages and pick a product
- Mortgage Light will submit your application to the lender
- The valuation will be instructed
- Valuation will be received by the lender
- The documentation that the lender requested will be assessed
- The mortgage offer will be issued and a copy sent to yourselves and your solicitor
- Set a time to meet or speak to Mortgage Light to review your mortgage offer and discuss your protection needs
Stamp Duty
- Contact solicitor for an estimate of costs
- Call solicitor to accept the quote and complete and return the instruction form they send to you
- Make payment for searches (usually between £300 - £350)
- Authorise your broker to email certified ID to the solicitors
- Solicitors will receive a contract pack from the sellers (within 5-10 working days), solicitor will request searches and raise enquiries (within 5 working days)
- Send bank statements and evidence of funds to quantify how the funds have been accrued
- Call solicitors to check all enquiries have been answered and they have a copy of the mortgage offer
- You will receive a contract to sign, along with a full copy of the solicitors title investigations and the fixtures and fittings list
- Sign and return your contract and send the deposit funds to your solicitor
- Set a completion date. The solicitor will exchange contracts and fix the date for completion
- Completion day arrives and you can now collect the keys. You are now a homeowner!
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GOT A QUERY...?
Frequently asked questions
Got a question? It might be answered here. You can also head over to our FAQ page to read more of our frequently asked questions.
Who can get a Shared Ownership mortgage?
Shared Ownership mortgages are available to first-time buyers, or homemovers as long as you meet the Shared Ownership criteria and you don’t have a property in the background on completion. You must be at least 18 years old and your household income must be less than £80,000 a year (£90,000 in London) to qualify.
It’s also worth noting that you cannot get a Shared Ownership mortgage on any property for sale on the market. It is only applicable to certain homes and these are usually specifically purpose-built.
Will I be able to own 100% of the property?
Yes, if you keep buying shares from the Housing Association, you can eventually own 100% of the property. This is called ‘staircasing’. Before you can increase your share, you will need to pay your Housing Association to carry out a property valuation to see if it has increased in price - which involves a valuers fee.
Housing Associations allow you to buy a variety of shares. The cost of your new share will depend on how much your home is worth when you want to buy the share. Shares will cost more if your home’s value has increased, and less if it’s decreased. Remember - the more shares you buy, the less rent to the Housing Association you will pay.
How do I apply for Shared Ownership?
Firstly, you will need to find your local Help to Buy Agent which you can do on the government’s Help to Buy website. Once you’ve found your local agent, their website should contain details of how to apply for Shared Ownership. You’ll be asked a few questions such as:
- Where you want to live
- What your income is
- How much money you have in savings
- A brief summary of your history of making credit repayments and debts
- Credit File
When you have been accepted, you can begin to look around for a Shared Ownership property.
Once you have found a property you will need to go through a full financial assessment with their designated financial adviser, and you may also have to have a credit check. You will discuss what kind of share you can afford and what your rent payments would be.
Upon being approved, you will need to put down a reservation fee which is typically £200, but varies.
When it’s time to find a Shared Ownership mortgage, using a mortgage broker such as Mortgage Light will make the process much easier. You will go through a similar process of financial checks and we will ask you for:
- 3 months wage slips & proof of any commission or bonuses
- 3 months bank statements
- Proof of ID & proof of address
- Proof of deposit money
- Mortgage statement
We can then find you a suitable deal and help you complete your mortgage application.
How does Shared Ownership work when you sell?
You do not get to choose how much the property goes on the market for. This will be down to the Housing Association’s property valuer to decide. They use a RICS surveyor to value your property. The fee does depend on the purchase price but generally costs between £250-£350 + VAT, and it's payable by the homeowner.
When the Housing Association put the house on the market, they will only have a certain period of time in which to sell it. If they don’t manage to sell it within this time frame, you can put it on the open market, but you will incur estate agents fees.
Can I make home improvements to my Shared Ownership property?
Unlike a private landlord with a shared ownership you are able to decorate and modernise your home without needing to inform the Housing Association. If you are looking to extend your home or change the footprint you would need approval from your housing association. but any improvement value would be allocated to you at point of sale.
SEE WHAT OUR CLIENTS HAVE TO SAY...
Testimonials
CONTACT US TODAY ABOUT YOUR SHARED OWNERSHIP MORTGAGE
Straight talking mortgage advice.
We are an experienced Shared Ownership mortgage broker. We have dealt with Shared Ownership mortgages since we began trading and have helped many people to own 100% of their house after only a few years, depending on their circumstances. Our team of Shared Ownership mortgage advisers are waiting to help you make use of this affordable scheme, and we promise that you’ll be in the best hands.