How to buy your dream home with shared ownership in the UK
If you are looking for a way to get on the property ladder in the UK but can’t afford to buy a home outright, shared ownership might be the solution for you. Shared ownership is a government-backed scheme available in England, Wales, Scotland, and Northern Ireland that allows you to buy a share of a property and pay rent on the rest.
This scheme is particularly beneficial for first-time buyers and those with a smaller deposit. In this blog, we will explore shared ownership in more detail and guide you through the process of buying your dream home.
What is shared ownership?
Shared ownership, also known as part buy, part rent or co-ownership, is a type of affordable housing scheme. With shared ownership, you purchase a share of a property, typically between 25% and 75%, from a housing association or a private developer. You then pay rent on the remaining share, along with service charges and maintenance fees.
Smaller deposit and mortgage
Compared to buying a home outright, shared ownership requires a smaller deposit and mortgage, making it more accessible for first-time buyers.
Flexibility to increase your share
Shared ownership allows you to start with an initial share that fits your budget and increase it over time. This process, known as staircasing, reduces the amount of rent you pay and increases your equity in the property. Ultimately, you can own 100% of the property.
Access to desirable properties
Shared ownership enables you to access properties that might otherwise be out of your reach, such as new builds or homes in desirable locations.
Potential increase in property value
As you increase your share of the property, you can benefit from any increase in its value. This can be advantageous when it comes to building equity and potentially making a profit if you decide to sell in the future.
The drawbacks of shared ownership
While shared ownership has its advantages, it’s essential to consider the potential drawbacks:
Rent and additional fees
In addition to your mortgage payments, you are required to pay rent on the portion of the property you don’t own. Furthermore, you must also cover service charges and maintenance fees, which may be higher than in other types of properties.
Limited control over the property
As a shared owner, you may have less control over the property compared to owning it outright. Certain restrictions may apply when it comes to making alterations or improvements.
Potential fees for buying or selling shares
If you decide to buy more shares in the property or sell your existing share, you may be required to pay fees to the housing association or developer.
Sufficient savings
You will need to have enough savings for a deposit and other upfront costs, such as legal fees and survey fees.
Secure a mortgage for your share of the property
Once your application for shared ownership is approved, you will need to secure a mortgage for your share of the property.
Get in touch
We are experts at arranging Shared ownership mortgages. We compare over 74 lenders and thousands of mortgage products to find the most suitable mortgage for your situation. Contact us for more information and to see if shared ownership is right for you. – Link to contact page
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