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SHARED OWNERSHIP MORTGAGES

SHARED OWNERSHIP MORTGAGES

Shared ownership mortgages can also be called part rent or part buy. It can be difficult and time consuming trying to find the best in the UK market on your own.If you would like to own your own home, but cannot afford to buy on the open market, shared ownership could be for you. You will have sole occupancy rights and you do not have to share your home with anyone else. Purchasing a property with a housing association using a shared ownership mortgage is a popular method for first time buyers as getting on the property ladder becomes increasingly more difficult to achieve.

The scheme allows buyers to purchase 25 to 50 percent of the property and the housing association will own the rest. Also, you would have to rent the other portion of the property from the housing association whilst paying your portion of the shared mortgage. One of the advantages of this scheme is that you only need purchase a reasonably small part of the property initially and you can increase your shares by purchasing additional shares from the housing association later on.

The term for this additional purchase is known as ‘stair casing’. It makes it an enticing proposition for first time buyers with relatively low income compared to the average house prices. A distinct disadvantage is that you can lose part of the equity gains to the housing association as the properties value increases.
 

There are three main facts to remember if you intend to enter into a shared ownership mortgages.

You should make absolutely sure of the following;
• Confirm the percentage you intend to purchase.
• If you are providing a deposit, how much is it going to be?
• The amount of rent you have to pay for the share that is not yours. This figure is
important, because it will be needed to work out the amount that can be borrowed.
Not all borrowers circumstances are the same and some people can really benefit from the helping hand that shared ownership can offer in the early years.

Obtaining shared ownership mortgage funding on such deals is not as straight forward as standard purchases. This is due to some lenders not lending on such ventures. However, with the help of an Independent Adviser who specializes in shared mortgages you will be able to see quite clearly the wide range of deals available in the market.