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What is Shared Ownership?
Shared Ownership is a great way to get on the property ladder if your affordability doesn’t stretch to buying a home at full market value.
The scheme will allow you to initially purchase a share of the property, typically 10% – 75% of the full market value, with the option to increase your ownership share percentage in the future. Backed by the government and supported by many local housing associations, Shared Ownership schemes are available on New Build as well as pre-owned properties.
The scheme is usually aimed at First Time Buyers but is also open to those who have encountered a relationship breakdown and are struggling to fund the purchase of a property on their own. There are also some special schemes available to those over the age of 55.
Typically, you will enter into a Shared Ownership agreement with a housing association or similar organisation. You’ll need access to a deposit of around 5 -10% (of your share of the property price) plus a special type of mortgage.
A Shared Ownership scheme works on a part buy/part rent basis; the rent you pay is generally set at an affordable level of up to 3% of the remaining share of the property’s value. If you’re financially able to in the future, you have the option of increasing your percentage ownership of your home.
Approximately 157,000 households (1%) of households have taken advantage of this shared ownership scheme, according to the English Housing Survey (figures based on 2017/18).
Should I take advantage of a Shared Ownership Scheme?
Shared Ownership schemes are aimed at those who are unable to afford the cost of buying a whole property and wouldn’t otherwise be able to get on, or remain on, the property ladder. We have provided assistance to over 10,000 Shared Ownership applicants.
How do I buy a Shared Ownership home?
You are able to buy a Shared Ownership property by applying for the scheme in the area in which you want to live. Contact should be made in the first instance to your local Help to Buy agent to apply for acceptance on to the scheme followed by a call to New Homes Mortgage Helpline so that one of our experienced Advisers can talk you through the mortgage side of the purchase.
Our Mortgage & Protection Advisers are very experienced in Shared Ownership schemes and will be happy to answer any questions you may have.
What are the benefits of Shared Ownership?
Shared Ownership schemes make home ownership accessible to lower income households as the deposit and mortgage levels are lower.
The ability to increase your ownership share percentage in the future is of particular significance if you are in a training role, apprenticeship or starting a new career where you expect your earnings to increase in the future.
On the sale of your property, you will benefit from any rise in the value of the share you purchased.
What is the difference between Shared Ownership vs Shared Equity?
Shared Ownership and Shared Equity are both government schemes which are designed to help First Time Buyers purchase a property. It’s important to understand the difference between Shared Ownership and Shared Equity schemes before deciding which would be best for you.
Shared Ownership is where you buy a share of a property and pay rent on the rest. Shared Equity involves paying a similarly low deposit, combining this with an equity loan for a percentage of the property’s value, and getting a mortgage for the remaining amount. With a Shared Equity property you will own 100% of the property but will have a second charge loan attached to your home in addition to your usual mortgage.
For more information on the Shared Ownership scheme,
click below.
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