When will Help to Buy end?

The current version of the Help to Buy equity loan scheme in England will close to new applicants on 31 October 2022. In Wales it will continue until 31 March 2023. The Scottish scheme has already closed.

Can I use the Help to Buy scheme for a second home?

No, it’s only open to people who have never owned a home or land anywhere in the world before. The property you buy must also be the only home you own and live in.

How do I apply for Help to Buy?

To apply for Help to Buy in England, you must apply to the Help to Buy agent in the area where you want to live. To apply for the scheme in Wales, you must first find a Help to Buy-approved financial adviser and find a property being sold by a registered Help to Buy builder. You then need to submit an application form to Help to Buy (Wales). Visit gov.wales to find out more.

Can I make home improvements to a shared ownership house?

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.

Which lenders offer shared ownership mortgages?

Although not all lenders offer shared ownership mortgages, many do. These include local building societies as well as big lenders such as Barclays, Halifax, Nationwide, Santander and Virgin Money. It’s a good idea to speak to a specialist mortgage broker who will be able to find you the best deal for your needs.

What's the difference between shared ownership and shared equity?

With shared ownership, you buy a share of a property and pay rent on the rest, whereas with shared equity you buy the whole property, but you get an “equity loan” from the government 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.

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Shared ownership mortgages

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What is a shared ownership mortgage?

A shared ownership mortgage is one specifically designed for people buying a property through the shared ownership scheme. Not all lenders offer them, but many do.

Shared ownership is a government home-buying scheme designed to help people get onto the property ladder. It’s particularly aimed at those who can’t afford to get a mortgage on an entire home. With shared ownership, you buy part of the property and pay rent on the remaining share.

You’ll find the same types of mortgages for shared ownership as for any other residential mortgage. You’ll be able to choose from fixed-rate deals, where the interest rate stays the same for a specific period, and variable-rate deals, where your interest rate can go up or down.

How do shared ownership mortgages work?

Housing associations allow you to buy a share of between 10% and 75% of a leasehold new build or resale home, although different housing associations will set different lower and upper percentages. You then pay rent to the housing association on the remaining share.

As you’re only buying part of the property, you’ll need a smaller mortgage than if you were buying the whole property, so your deposit can be smaller too. You can borrow up to 95% of the share you’re buying with some lenders, which means you’ll only need a deposit worth 5% of that share.

For example, if you’re buying a 25% share of a £320,000 home this will cost £80,000. If you take out a 95% mortgage for this you’ll only need a deposit of £4,000.

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Who is eligible for a shared ownership mortgage?

You are entitled to apply for a shared ownership mortgage providing you’re eligible for the scheme itself, although whether you’re accepted will depend on your finances.

The shared ownership scheme isn’t open to everyone. In England, one of the following must apply:

You are a first-time buyer
You used to own a home but can’t afford to buy a new one
You have an existing shared ownership home and are looking to move
You’re forming a new household, for example, after a relationship breakdown
You own a home and want to move but can't afford a new home that meets your needs

There are also salary restrictions. The scheme is open to people with a household income of less than £90,000 a year in London or £80,000 in the rest of England. You also need to have a good credit history and not be in mortgage or rent arrears.

Advantages of shared ownership

There are a number of advantages to buying a home through shared ownership compared with buying an entire home:

You need a smaller deposit to get onto the property ladder
The cost of the mortgage and rent is likely to be less than renting
It’s possible to increase your share to 100% of the property over time
You can sell your home at any time, whether you own 100% or not

Disadvantages of shared ownership

There are a number of potential pitfalls to consider when you’re deciding whether to buy a home through shared ownership:

There are fewer mortgages to choose from as not all lenders offer them
As shared ownership properties are leaseholds you have to pay ground rent and service charges
To sell, you first need to go through your housing association, which means that the process can take longer
You won’t be able to sublet your home, although you may be able to have a lodger

What is a shared ownership scheme?

A shared ownership scheme is a government scheme designed to help you get onto the property ladder by buying a share of a property (rather than all of it) and renting the rest. This means you need a smaller deposit, which makes it more affordable.

Shared ownership is available in Scotland, Wales and Northern Ireland as well as England, although the schemes work differently.

How to apply for a shared ownership scheme

To apply for shared ownership in England, you first need to register with the Help to Buy agent in the area you want to live in.

Once you know you’re eligible, find a property you want to buy, which you can do on the agents’ websites. They may also be advertised by housing associations, local councils, home builders and on property listing websites. Once you’ve found a home you can apply for a mortgage.

What properties are available for shared ownership?

The homes available for shared ownership are purpose-built by housing associations, usually in a larger development or as part of the regeneration of an area. You can either buy a newly built home or one that’s being sold by someone who bought the property through shared ownership themselves.

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 “off plan” (before it’s completed).

Buying a resale property means you’ll be able to view the completed property, which makes it easier to see what it’s like. But you’ll need to buy at least the same share of the property as the current owner holds.

How much deposit do I need for a shared ownership mortgage?

As mortgages are available for up to 95% of the share you’re buying, the amount you’ll need for a deposit is relatively small compared to buying a whole property. However, it will depend on the value of the property and the share you’re buying.

For example, with a 95% mortgage, you’ll need a £4,000 deposit to buy a 25% share of a £320,000 home but £8,000 to buy a 50% share. If the home you’re buying only costs £200,000, you can buy a 50% share with a £5,000 deposit.

The less you borrow, the lower your interest rate will be. You’ll also have more lenders to choose from, so it’s worth paying as big a deposit as possible.

Bear in mind that you’ll also have to pay for the costs of buying and moving, such as mortgage arrangement fees, valuation and legal fees, and removals so make sure you factor these into your budget. You may need at least £4,000 to cover all these costs.

Claire Flynn - Senior Mortgages Editor at Uswitch

Getting on the ladder is hard, so schemes like shared ownership can really help. But your mortgage options will generally be more limited, so speak to an expert to work out what's best for you. ”

Claire Flynn

Shared ownership FAQs

If you’re a first-time buyer and the home you’re buying is worth £300,000 or less you don't have to pay Stamp Duty.

If you do have to pay it, you can choose to make a one-off payment for the value of the whole property at the outset, or you can pay it in stages. To do this, you pay it first on the price you pay for the lease (if it’s above the threshold), then again once you own more than 80% of the property.

Yes, you can. Once you’ve lived in your home for a certain amount of time, which will be set out in your lease, you’ll be able to buy more shares so that you own a bigger portion of the property. You can do this in stages, usually until you own 100% of the property if you wish.

You’ll need to increase your existing mortgage or remortgage for the new amount. Whether you can do this will depend on whether you meet the lender’s criteria. There will be costs involved that you’ll need to budget for.

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.

Staircasing is the process by which you increase the share of the home you own.

For example, if you have 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%.

To staircase, you’ll need to contact your housing association and tell them you intend to buy more of your home. It will value your property and offer you the share at a cost based on its current valuation.

Shared ownership mortgages

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What is a shared ownership mortgage?

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