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It's a normal mortgage that can be used with the shared ownership scheme. They're no different to any other residential mortgage, but not all lenders allow their products to be used alongside the scheme.
Lenders who advertise their mortgages as 'shared ownership', or sometimes 'part rent, part buy mortgages' are simply highlighting that they accept applicants using the shared ownership scheme to buy their home.
A mortgage broker will be able to help you find lenders who offer this type of residential mortgage.
The shared ownership scheme is a government initiative available in England, Scotland, Wales and Northern Ireland. It allows you to buy a share of a property from a housing association - between 10% and 75% to begin with.
This means you won't need to take out such a large mortgage to become a homeowner and you can do so with a smaller deposit. You can only buy specific properties in the scheme, not a home from the open market.
The scheme criteria vary a little depending on your country, but in England you need to:
Be a first-time buyer, no longer own a home and be unable to afford a new one with a traditional mortgage, or be unable to afford a home that meets your needs
Have a total household income of less than £80,000 per year, or less than £90,000 per year in London
Not be in rental or mortgage arrears (debt)
Be able to afford the costs associated with buying a home
To apply for the scheme you'll need to register with your regional shared ownership contact. Follow the links below for further information:
If you’re eligible, the next step is to find a property to buy. Suitable properties are usually advertised on agents’ websites, or by housing associations, local councils or home builders. They can also sometimes be found on property listing websites.
A broker can help you calculate how much a lender is likely to offer you. This can help you determine what size of share you can afford to purchase at the outset. Don't forget, you can buy more shares of your home later.
Shared ownership mortgaes work the same way as a standard residential mortgage. But as you're only buying part of the property, the deposit requirement and repayments are much less than if you were buying the whole thing. For example:
A 25% stake in a £200,000 property would cost you £50,000 in total. 5% deposit would therefore be £5,000 and you would borrow the remaining £45,000 from the mortgage lender.
The remaining share (75% if using the above example) is owned by the housing association and you rent it from them.
It might seem daunting to pay rent and a mortgage at the same time. The good news is, housing associations can't charge more than 3% of the total property value per year in rent.
The maximum rent on a £200,000 property would be £6000 per year. If you’re only buying 25%, they can only charge 75% of that - which is £375.
On top of rent, most housing associations add a service charge to cover the upkeep of communal areas. This may vary annually, or be a fixed fee. Always check your lease to make sure you understand the full costs.
As there are fewer lenders offering mortgages that can be used alongside the shared ownership scheme, there is less competition in this area of the market. This means that interest rates can be a bit higher than those available on non-scheme mortgages.
As with any mortgage, if you can put down a larger deposit, you can get access to a better range of rates and deals. Sometimes a small increase in deposit can make a difference, so it's worth seeking advice on this.
You can increase the share of the property that you own over time, which is known as staircasing. In many cases you're able to eventually increase ownership to 100%.
However, shared ownership properties specifically aimed at 55+ applicants won't usually allow this and cap it at 75%. Make sure you read the terms and conditions carefully.
Some mortgage lenders happy to accept applications from those using the scheme are:
Leeds Building Society*
*Lenders can change their available product range at any time, so always check their website for up-to-date information.
Each lender also has different criteria, so it’s a good idea to speak to a broker to find the best shared ownership mortgage for your needs.
It’s important to understand that as well as being eligible for the scheme, you'll also need to qualify for the mortgage.
It should be easier to qualify for a shared ownership mortgage than a full mortgage, as the amount you need to borrow will be much lower. You'll still need to meet the lender’s criteria, which vary from one lender to another.
Ultimately they want you to prove you can afford to repay the loan and rent, as well as pass a credit check.
Lenders usually want a minimum of 5% of the value of the portion of the home you're buying. However, if you can afford to put more than 5%, you'll likely have access to better rates.
On a £200,000 home, buying the minimum share of 10% (£20,000) would require just £1000 deposit (or 5%). To buy 50% of the property, you'd need to borrow £100,000, so 5% would be £5,000
To find the best shared ownership mortgage for you, your best bet is to speak to a mortgage broker. They can ensure you apply to a lender that accepts the scheme and has criteria you're able to meet.
You can apply directly with a lender, once you've been approved for the government scheme. But if you want to find the best shared ownership mortgage rates, a broker can compare the market quickly on your behalf.
There are a number of advantages to buying a home through shared ownership rather than buying a complete home, such as:
You'll need to borrow much less, so need a smaller deposit and can usually meet affordability criteria more easily
Mortgage and rent charges combined may be less than renting an equivalent property privately
It’s usually possible to increase your ownership to 100% of the property as and when you can afford to do so
You can sell your home at any time, whether you own 100% of it or not
If the value of your home rises, so will the value of your share in the property
Although this can be a great way to get onto the property ladder, it’s important to be aware of the potential pitfalls of shared ownership:
Shared ownership properties are sold on a leasehold basis, meaning you'll usually have to pay a service charge for the upkeep of grounds and communal areas
Not all lenders offer mortgages to suit the shared ownership scheme, so you'll have less choice than the average mortgage applicant
When you sell your home, the housing association typically has to first refuse to buy it back from you, which can be more difficult than advertising it on the open market
You won’t be able to sublet your home, although you may be able to have a lodger
You can remortgage shared ownership properties, but only those lenders that offer shared ownership mortgages will provide them. Like any remortgage, this will be easier to qualify for when you've gained a good amount of equity in your home.
Many people remortgage shared ownership homes to increase the size of their share, but it's also possible to switch mortgages simply to access a better interest rate, or to borrow money for another purpose.
Something to be aware of when considering this is that lenders offering shared ownership mortgages tend to charge slightly higher rates and fees for remortgages than other lenders, as there is less competition. A broker will be able to help you access the best rates available to you.
You can sell your shared ownership home at any time, but this usually needs to be through the housing association unless you own 100%. Even then, you may have to offer it to them before putting it on the open market.
When you sell, the housing association set the price, then buy the property back, or advertise it for resale to other shared ownership applicants. If it doesn’t sell after a certain period (set by the housing association) you may be able to advertise it for sale yourself.
You can make a profit from selling your shared ownership home, if your home has risen in value since you bought it, but you only profit on your share.
If you own 50% share of your home, the proceeds of sale (including any profit) are split equally between you and the housing association.
You're not allowed to make a profit through renting the property out.
Getting on the property ladder is hard, so schemes like shared ownership can really help. But your mortgage options will be more limited, so speak to an expert to find the right lender for you.”Kellie Steed, Mortgage Content Writer
If the value of your property goes up or down but you’re not intending to buy more shares, remortgage or sell at that time, it will have little impact.
When you do come to remortgage, the value could affect the amount of the property’s value you’re borrowing. This means you could pay more for your mortgage if the percentage has gone up.
If you’re buying an extra share, a fall in the value means the cost of this will be less than it would have been at its original value. On the other hand, if the value has gone up, the cost of the share will too.
There aren't specific brokers that focus purely on shared-ownership, but the vast majority of them will be able to help you if you're looking to use the scheme.
It's a good idea to seek professional guidance from a mortgage broker, as not all lenders offer mortgage products that can be used with the shared ownership scheme. They can help you to find one, as well as helping you to get a competitive rate, so it's certainly worth speaking to one.
You can make cosmetic changes such as redecorating or replacing the kitchen or bathroom, but to make structural changes you’ll need to get permission from your landlord.
With shared ownership, you buy a share of a property and pay rent on the rest.
With shared equity you buy the whole property, but you get an equity loan to pay for a percentage of it. This means you pay back the same percentage of the property’s value when you sell it rather than the amount of the original loan.
Staircasing is the process by which you increase the share of your shared ownership home.
For example, if you hold a 25% share of your property, you can choose to increase it by a further 25%. This means you would then own 50% of the property and will only need to pay rent on the remaining 50%.
Staircasing allows you to build up your ownership gradually – you’re able to buy shares in increments as small as 1% at a time. Each time you increase your ownership, you will need to pay the housing association to carry out a valuation on the property, so it’s worth bearing this in mind if you intend to increase ownership in such small multiples.
If the value of your home has risen, each share will be more expensive than the original shares that you bought, but if house prices have fallen, you’ll be able to increase your share more cheaply.
If you’re a first-time buyer and the home you’re buying is worth £425,000 or less you won't have to pay Stamp Duty. If you’ve owned a home in the past, you will be charged stamp duty if the property is above £250,000.
As you aren’t taking on the full property, you won’t have to pay the total stamp duty charges when you buy the home, however, and will be able to make payments in stages. Or you can choose to make a one-off payment for the value of the whole property at the outset.
If the price you pay for the property is above the Stamp Duty threshold, you will make one payment at the start of the mortgage, then you won’t need to pay any more towards the stamp duty that you owe until you own more than 80% of the property.
Shared ownership homes are purpose-built by housing associations, and usually in a larger development. You can either buy a newly built home or one that’s being sold by someone who bought the property through shared ownership previously.
Buying a new build means you’ll be the first person to own the property and won’t be part of a chain when you buy it. But you may have to wait for it to be built if you buy it before it’s completed.
A resale property is easier to view, but you’ll need to buy at least the same share as the current owner holds, so there's less flexibility. You may not want to purchase that size of share.
Last reviewed: 3 October 2023
Uswitch is not a mortgage intermediary and makes introductions to Mojo Mortgages to provide mortgage solutions. Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website. Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH. Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215) Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH, and head office is WeWork No. 1 Spinningfields, Quay Street, Manchester, M3 3JE. To contact Mojo by phone, please call 0333 123 0012.