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Shared ownership mortgage

For buyers with a more limited budget, a shared ownership mortgage can help you get onto the property ladder far more quickly.

This mortgage type is often aimed towards first time buyers, but anyone looking to save on their mortgage could benefit from the savings a shared ownership property can offer.

What is a shared ownership mortgage?

With a shared ownership mortgage, a buyer can purchase a percentage of a property and pay rent to a landlord on the share they don’t own. The share you can purchase varies but it can be anywhere between 10%-75%.

This is a government backed scheme designed to help more people in the UK onto the property ladder. There are many benefits to shared ownership, with it being a middle step between between renting and buying.

It allows buyers the freedom to decorate and make adjustments to their home more freely than in a rental property, with the benefit of not needing to borrow and pay back as much capital.

This means those with a tighter budget will need to save less for a deposit and can purchase a property much sooner than with a typical mortgage deal. The deposit you need will also be based on the percentage of the property you plan to buy rather than the properties overall value.

How do shared ownership mortgages work?

With shared ownership, you will initially purchase a set percentage of a property (usually between 25%-75%, though 10% is the smallest share available). You will then repay the mortgage every month as well as paying rent on the percentage of the property you don’t own.

This type of mortgage is usually only available on new build properties owned by a local council or housing association but this can vary.

This does limit the type of property you can buy, but if looking to save and already interested in a new build a shared ownership mortgage could be a great option.

In a process known as ‘staircasing’, you have the option to buy more shares of your property in the future up to 100% of the property. The more shares you own, the less you will need to pay in rent.

You can either remortgage to access more funds or use savings you have built up in the meantime.

Mortgage advice for shared ownership

The first step in applying for shared ownership mortgages is making sure you are eligible for this mortgage type.

To qualify for a shared ownership mortgage you must have an income or combined income of less than £80,000 (£90,000 if the property is in London) and also be one of the following:

  • A first time buyer or someone who has previously owned a home but now cannot afford to buy one
  • Someone who owns an existing shared ownership property who wishes to move
  • Be forming a new household e.g. moving into a new property after a divorce
  • Own a home currently but cannot afford to move to a new home that meets your needs, for example if you have a disability

If you meet all of these criteria, then a shared ownership mortgage could be a great option for you. We would advise speaking to a mortgage specialist such as us for more information about the application process and how to find the best available deals.

Shared ownership mortgage broker

When applying for a mortgage, some additional help and support may be beneficial particularly if you have never gone through the process of a mortgage application before.

Shared ownership is very often targeted towards first time buyers. As experts with a wealth of knowledge about first time buyer mortgages and shared ownership, we are here to help.

A specialist broker who is familiar with shared ownership mortgages will always be best placed to offer advice on the right choice of lender and mortgage terms. Our team can compare deals across over 50 top UK lenders to find the perfect deal for you.

This is the case whether buying a home for the first time or seeking a shared ownership mortgage for other reasons such as moving from an existing shared ownership property.

Learn more about how to find great first time buyer mortgages.

Best shared ownership mortgage

The way of finding the best shared ownership mortgage will be to assess what deals are available and which best suits your needs.

If you fall into certain groups, you may even be able to access deals others cannot. For example, anyone aged 55 or over can buy up to 75% through what is known as the older people’s shared ownership (OPSO) and not need to pay rent on the other 25%.

Those with long term disabilities can also benefit from a scheme known as HOLD (home ownership for people with a long-term disability. This can be used if you can’t otherwise buy a property that is suitable for your needs e.g. needing a property without stairs.

It is worth speaking to a broker familiar with these schemes who can offer advice on which lenders will offer the best mortgages for each situation.

100% shared ownership mortgages

Under certain circumstances, you may be able to purchase a shared ownership property with no deposit in what is known as a 100% LTV (loan to value) shared ownership mortgage.

These mortgages exist but are offered rarely and a lot of lenders who offer them don’t openly advertise it. That is why if you are seeking this mortgage type it is worth speaking to a broker with an extensive knowledge of lenders.

If 100% LTV is out of reach, you may be able to get a lender to agree to a higher percentage than the usual 75% maximum (80%, 90% or even 95%). This however will depend on the lender and other factors such as affordability checks, credit history etc.

Securing a shared ownership mortgage over 75% can be a difficult process so speaking to a mortgage specialist who understands this mortgage type well will be key to your application.

Shared ownership mortgage comparison

The best way to find a mortgage deal with the most competitive rates possible is always comparison. Shared ownership mortgages are not available through every lender so it is worth starting by finding out which lenders will offer this mortgage type.

If unsure where or how to begin your search, speak to a specialist mortgage broker such as us. We have access to over 50 of the UK’s top mortgage lenders and can easily source the right deal for each buyer.

Through some comparison via our team of experts, you should be able to find a great deal that works well for what you need in terms of length of mortgage, interest rate type etc.

Shared ownership mortgages bad credit

Although having a poor credit history can seem like it will block you from getting a mortgage, this is not always the case. It can be more difficult to get a shared ownership mortgage with poor credit but it isn’t impossible.

It is vital if you have credit issues to speak to a broker who understands which lenders are best under these circumstances.

This is especially true in relation to shared ownership mortgages, as not all lenders will offer this mortgage type. As expert mortgage advisors, our team knows exactly which lenders are best suited to both poor credit and shared ownership properties.

We can search deals across mortgage providers and will ensure you only apply to the lenders most likely to approve your application.

Learn more about applying for a mortgage with bad credit.

Mortgage specialists for shared ownership

With a more specific mortgage type such as shared ownership, it is always worth speaking to a broker who knows the market well and can compare hundreds of deals on your behalf.

We have years worth of expertise in all types of mortgage available on the market. This includes mortgages that are used for shared ownership properties.

Our team of specialist independent advisors can search deals across the UK to find the perfect mortgage for each buyer.

Useful resources

Gov.uk – Shared ownership homes: buying, improving and selling

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