Shared ownership mortgages are becoming an increasingly popular option for first-time home buyers in the UK. With rising property prices and stricter mortgage lending criteria, the traditional route of purchasing a property outright can be daunting for many. Shared ownership mortgages allow buyers to purchase a percentage of a property and pay rent on the remaining percentage, making it a more affordable option. In this article, we will be discussing shared ownership mortgages in depth, including the eligibility criteria, application process, and benefits. Whether you’re a first-time buyer looking to get on the property ladder or simply looking for an affordable alternative, this guide will provide you with all the information you need to make an informed decision about shared ownership mortgages.

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Introduction To Shared Ownership Mortgages

The idea of shared ownership properties was first introduced a few years ago at the height of the UK property boom, a boom that saw house prices rise faster than at any time in the past few decades. Unfortunately, this meant that a lot of people on low incomes were having great difficulties with getting a mortgage that covered the cost of the property that they wanted to buy.

Due to the number of people who were struggling to get onto the property ladder, shared ownership was introduced whereby the person part rents and part buys the property. This scheme can either be run by a private house builder or via a government scheme.

The amount of property you can buy under a shared ownership scheme varies and starts from as low as 25% and as high as 75% of the property’s current market value. This amount is the amount you will get the mortgage on, the remaining percentage of the property is what will be owned by the housing association and you can expect to pay rent at around 3% of the value of the housing association’s share. All shared ownership properties are classed as leaseholds, and this means that you will own the lease on them for a number of years, usually 99 years. In addition to paying the mortgage on your share of the property and the rent on the housing association’s share, you may also have to pay a service charge, and this is typically paid on a monthly basis.

If you are interested in getting a shared ownership mortgage, you can contact a mortgage broker to help you with your application process.

How Much Deposit is Needed?

When you first decide to buy a property, you will already know how important it is to pay a deposit towards the amount so that you avoid getting a 100% mortgage. Shared ownership is no different, and it makes sense to have as much money to put towards the deposit as you can. The amount that you will have to pay as a minimum for a deposit will vary greatly from mortgage lender to mortgage lender, typically though you are probably looking at between 10% and 20% of the value of the property, depending on whether it is a newly built house or flat.

Examples of Shared Ownership Mortgages

As an example, let us take a look at how a shared ownership mortgage would work when you buy a 25% share of a property through a housing association.

Let us say that the market value of the property is £160,000. The share owned by the housing association is 75%, which equates to £120,000. The share you hold is worth £40,000 for your 25% share. Say the deposit amount is 10%, you pay that 10% on your share so that the total that you would need to pay as a deposit comes to, £4,000. So the amount of mortgage that you would need to apply for will be £36,000. Then you will also pay rent on the 75% that is owned by the housing association, although these rents are typically subsidised.

Shared Ownership Lenders and Providers

There are a number of different schemes that are run by the government under the title of HomeBuy, with the most popular one being New Build Home Buy. Certain properties are only available to those people whose jobs classes them as key workers, and these are typically teachers and nurses and workers in the emergency services. There will be certain criteria that you will have to meet in order to be eligible, such as the level of income, residency and other issues.

Not all mortgage companies offer shared ownership mortgages, but some of those that do include such lenders as Santander, Nationwide and The Halifax.

Which are the main shared ownership lenders and providers in the UK?

The main shared ownership lenders and providers in the UK are:

1. Nationwide Building Society

2. Halifax

3. Santander

4. Barclays

5. Lloyds Bank

6. NatWest


8. Virgin Money

9. The Co-operative Bank

10. Aldermore Bank

How do I find a shared ownership lender or provider that’s right for me?

To find a shared ownership lender or provider that’s right for you, you can start by researching different options online and reading reviews from other customers. You can also consult with a financial advisor or mortgage broker who specializes in shared ownership mortgages to get a better understanding of the available options and their terms and conditions. Additionally, you can check with your local housing authority or government agency, as they may have a list of approved shared ownership lenders and providers in your area. It is also important to compare the interest rates and fees of different lenders and providers and to carefully review the terms and conditions of any loan offers to ensure that they meet your needs and are affordable for you.

What are the pros and cons of choosing a shared ownership mortgage?

The pros of choosing a shared ownership mortgage include:

1. Lower initial cost – You only need to pay for the share of the property that you own, which can be much lower than the full market value.

2. Flexibility – You can increase your share in the property over time or even sell your share and move on when you are ready.

3. Subsidised rent – The rent you pay on the share owned by the housing association is typically subsidised.

The cons of choosing a shared ownership mortgage include:

1. Limited choice – You may not be able to choose the property you want, as only certain properties are available for shared ownership.

2. Restrictions – There may be restrictions on who can apply for a shared ownership mortgage, such

Damian Youell

Feel Free To Start WhatsApp Chat With Us...

How We Work

1: We contact you and take down your details, income outgoings, name, address etc.

2: We will research the whole market and email you a detailed quote as well as a list of documents to proceed.

3: You upload the documents and information needed via our channel our online portal.

Feel Free to Contact Us

Shared Ownership Mortgages FAQs

  • How much should I be earning in order to be eligible? If you are thinking about going down the route of affordable home ownership, then you need to be earning in excess of £15,000 per annum, either on your own or joint income for a couple.
  • Who can apply? Typically, Affordable home ownership loans are tailored towards those people who are buying property for the first time, those living in private rented accommodation, and those people who are on low incomes.
  • So which party has the responsibility for the upkeep and repairs to the property and any communal areas? As you are the owner/occupier, then you will have the responsibility to fix any problems in the property. The only exception to this rule is any defects that are covered by the builder’s guarantee that comes with newly built properties.
  • What will happen if I cannot meet my payments? If you cannot meet your monthly obligation for your mortgage payment, then you should contact your lender as soon as possible. Just like any other mortgage, if you fail to keep up to date with the repayments, your home could repossess and sold in order to clear the outstanding amount.

About The Author

mortgage broker damian youell

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Damian is an experienced mortgage broker, founder of Ltd and company director. With over a decade working as a mortgage broker he has a strong understanding of hard to place mortgage cases. With hundreds of 5 star client reviews. hundreds of repeat clients his work speaks for himself.

He started as a one man band with the philosophy of putting clients needs ahead of his own. This ethos of offering excellent customer service has helped the business grow over the years. He gets satisfaction on getting cases pushed through to offer stage where other mortgage broker and companies have failed.

Throughout his time as an adviser he has carved out a niche area of advice helping clients with their business protection requirements too. Having helped hundreds of client with Relevant Life Policies, Shareholder Protection Insurance, Keyperson Policies and other important protection requirements of large to small businesses.

At home he is a family man and likes to spend his time with his four children and wife Lisa. He enjoys going on holidays spending time with friends and going for walks.