Shared Ownership mortgages are an alternative way of getting on the property ladder. They’re a little more complex than your average mortgage, but they can be very beneficial. So, what are they? And could you be eligible for one?
How Shared Ownership mortgages work
The Shared Ownership scheme in England varies slightly to those offered in Northern Ireland, Scotland and Wales. As a guide, we’ll look at Shared Ownership mortgages in England.
Also known as ‘part rent, part buy’, at the outset you will own a share of your home. You’ll have the option to buy some, or the rest of, the share down the line. You’ll have to pay rent on the share you don’t own.
Benefits of Shared Ownership mortgages
The many benefits include:
- They can provide an opportunity to own your own home where you may not be eligible for a mortgage otherwise.
- Whilst a deposit is usually needed, it is not based on the full property price. Instead, it’s based on the share you are purchasing.
- Properties are available throughout the country.
- They work well for those open to buying new build homes as it’s mainly these properties that are sold through Shared Ownership schemes. It’s worth noting they may have been lived in previously, though.
- You are able to purchase more shares in your property as your finances change – up to 100%.
- You can opt to pay stamp duty on just your share or the entire property.
- Different types of Shared Ownership mortgages are available to different groups of people, including older buyers and those who have disabilities, as our eligibility criteria segment shows.
Potential drawbacks of Shared Ownership mortgages
There are some potential drawbacks that you will need to be aware of. They include:
- You won’t own your property outright, at least not to start.
- These mortgages can work out to be more expensive than others.
- You’ll be paying rent on the share you don’t own, which can also work out to be expensive.
- Shared Ownership homes are usually leaseholds, which can incur additional costs.
- No matter how much of the property you own, all repairs will fall to you.#
- When it comes to selling, the process can be complicated.
