If you cannot afford, or are unable to obtain 100% of the mortgage required on a home, Shared Ownership could be the answer. Under the Help to Buy, Shared Ownership Scheme you can purchase a proportion or share of your home and then pay a reduced rent on the remaining share. Then, as and when you are in a position to do so, you can purchase further shares until you own it outright.
How does Shared Ownership work?
Shared Ownership schemes typically work on new build properties and are offered by housing associations as part of the Government’s commitment to provide affordable housing. The process is simple, you secure a mortgage to buy a share of your desired new build property – this is generally between 25% and 75% of the property. You will then pay your mortgage on the percentage of the house that you own, with a discounted rent rate being paid on the remaining share to the housing association.
You can then buy more of the home by increasing your share as you can afford it, this is called ‘stair-casing’ and will, in turn, reduce the amount of rent being paid until the property is eventually owned outright and the rent payments cease.
Check your eligibility
To be eligible for the Shared Ownership Scheme, you will need to meet the following conditions:
- You must be a first-time buyer
- You have owned a home in the past but are now unable to afford one.
- Your annual salary must not exceed £80,000, this rises to £90,000 in London.
You may also qualify for the Shared Ownership Scheme if you have a long-term disability.
Things to consider
If you are considering using a Shared Ownership Scheme to purchase your home there are a few things you need to consider:
- The amount you pay to purchase a further share in the property depends on the market value of your home. If property prices go up, you’ll have to pay more, however, if they fall, you’ll pay less.
- As you won’t own the property outright, you may have to seek permission from the housing association if you want to make home improvements or carry out renovations.
- If you decide to sell before owning 100% of the property, the housing association has the right to find you the buyer – meaning a sale can take longer to complete.
We work with a select number of Homes England agencies and local authorities, but for more general information about the Shared Ownership scheme, please visit the Help to Buy website or find your local Help to Buy agent.
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