Shared Ownership Mortgage

Mortgage Broker Sussex

Shared Ownership in East Sussex

Shared ownership is a housing scheme that allows individuals to part-own and part-rent a property. This arrangement offers lower monthly mortgage payments by sharing the financial responsibility. Over time, it also provides the opportunity to purchase the rented portion of the property if desired.

What is a Shared Ownership Mortgage?

A shared ownership mortgage is a government-backed initiative designed to assist individuals who may struggle to enter the property market due to income and savings limitations relative to property prices. Typically, between 25% and 75% of a property is purchased from a housing association or house builder, allowing for a smaller mortgage and a reduced deposit. Rent is then paid on the remaining share.

How is a Shared Ownership Mortgage Different?

One significant difference with a shared ownership mortgage is that the deposit required is only for the portion being borrowed. For example, in a £200,000 property where a 50% stake is sought, a 10% deposit would amount to £10,000. In contrast, a conventional 90% LTV mortgage for buying the property outright would require twice that amount at £20,000.

To qualify for a shared ownership mortgage, specific criteria must be met. These include maximum income thresholds, being a first-time buyer or a previous homeowner who cannot afford to buy currently, renting from a housing association or the council, or having a long-term disability. Another condition is that you must reside in the property and cannot rent it out partially or entirely.

An advantage of the shared ownership mortgage is the ability to increase ownership through a process known as "staircasing." As your circumstances permit, you can purchase additional shares from the housing association or house builder.

When it comes to selling, there is a distinction between shared ownership and other mortgages. If you own 100% of the property, you can sell it independently. However, for the first 21 years after your purchase, the housing association usually has the right of refusal. If you do not possess full ownership, the housing association has the initial right to find a buyer.

Considerations for Shared Ownership

Before proceeding with a shared ownership mortgage, several factors should be taken into account:

  • Shared ownership with a house builder or housing association differs from purchasing a property with a friend or relative.
  • To find eligible shared ownership properties, it is advisable to consult a local agent in the desired area.
  • The price for increasing your ownership share typically reflects the rise and fall of the property's value. Consequently, if the value increases, you will pay more, and if it decreases, you will pay less.

Finding a Shared Ownership Mortgage

If you are considering a shared ownership mortgage and meet the criteria, it is recommended to seek guidance from an advisor experienced in this field. At Transparent Mortgage Services, our specialist shared ownership mortgage advisors can assist you in understanding your options and finding the most suitable scheme for your needs.

Transparent Mortgage Services Logo Icon White
Let's finance your perfect home.
Get Started
We have created an easy process, with expert advice
Discuss your options

Speak to a friendly, expert Mortgage Adviser about your unique mortgage needs.

Compare deals

We'll search 1000s of products for the best mortgage and present our advice to you.

Submit your application

Your Adviser will complete your application, liaise with the lender and you, keep you informed until completion.