What is a shared ownership mortgage or Co Ownership Mortgage?
A shared ownership mortgage is a term used for a property loan that you obtain to buy a house that you partly own and for the rest of the part you pay rent. It means you can buy the 75% share of a home and the rest of the 25% remains under the authority of the housing association. For the part that is owned by the association, you have to pay a particular rent.Shared ownership is also known as co-ownership and you can find lenders offering mortgage with this name.
How the shared ownership mortgage works?
- To buy a home through shared ownership, you need first to contact the ‘help to buy’ local agents.
- Once you finalise a property you need to decide how much part you want to own such as 25%, 40%, 75% etc.
- Rest of the property share remains under the authority of the housing association
- Find a suitable and relatable mortgage deal either on your own or through a broker.
- Your mortgage is the reciprocation of the share of ownership you have in the house
- In shared ownership, it is necessary to prove repayment on the two fronts. 1) for mortgage repayments 2) for paying rent for the rest of the property share.
Did you know?
- You get a shared ownership mortgage only when you are intended to occupy the property.
- You cannot put the other part of the house (in control of housing company) on rent.
How much deposit is required for a shared ownership mortgage?
Your mortgage acts according to the percentage of share of the property you purchase, and the deposit will also apply accordingly. It means if you are buying the 75% of the property, your down payment is 5% to 10% of that value.
An example here can explain you clearly –
|Total property value is||£3,50,000|
|You are buying||75%|
|75% of the total property value is||£2,62,500|
|You need to deposit||(5%) £13,125 and 10% £26,250|
Whatever percentage you give 5% or 10%, you will pay only against the percentage of the property value that you buy and not the total price of the home. The similar rule is applicable in the case of affordability for a mortgage. Your repaying capacity is calculated only according to that specific value that you will own after buying. Shine Mortgages has advanced financial tools such as shared ownership mortgage calculator that give almost perfect results. The deal becomes predictable, and you can make confident decisions.
Note: The initial rate shared ownership mortgages for two years starts from 1.33%, and for five years it is 1.5% while variable rate starts from 3.2%.
How to get a quote for a shared ownership mortgage?
The process is quite simple and easy to understand because we always make things easier for you.
- Visit our website
- Fill the one-page form
- Within 15 minutes, we will contact you with the most promising mortgage deals suitable according to your financial capacity.
After you get the quote, you can either pick a deal immediately or can meet us virtually/face-to-face to get a better understanding and comparison between the suggested deals.
We deal with -
- Building societies
- Direct lenders
Note: Shared ownership mortgages are available only for the first time buyers. With its comprehensive approach, Shine Mortgages can manage to arrange nationwide shared ownership mortgage deals. We exist across the UK, and whatever is your location, we are sure to serve you there with the complete knowledge of the local market.
Shared ownership Vs Help-to-buy
Among the government schemes, it can become difficult to choose the most suitable one. A comparison may help you make mind better. Here is the mention of contrast between the shared ownership and help-to-buy scheme. Both are the Government schemes but with different features. The one similar thing between the two is they both aim to make the home buying affordable for the people with lower income and weaker financial capacity to buy a house.
|Shared ownership||Point of difference||Help-to-buy|
|Own the house partly with the housing association and can buy maximum 75% share in the property.||Meaning||You individually own the house, but 20% of the total property value is obtained from the Government.|
|The household income should not be more than £80,000 per annum. In London, it is £90,000.||Maximum income limit||There is no cap on the part of the maximum income. Anyone can avail the service.|
|Shared ownership is offered on new build homes as well as resale properties.||Types of houses available||Help to buy are available only on the new build homes and the properties more than £600,000.|
The pros and cons of shared ownership
For a well-play strategy in the mortgage, you need to know all the aspects of a certain type of property ownership. Here are some pros and cons to consider before you invest shared ownership properties in the UK.
Who can apply for co-ownership mortgages(Shared Ownership Mortgages)?
A list of terms and conditions apply on the eligibility for shared ownership. Fulfil these conditions, and you can buy and can also get a mortgage without any mess.
- Minimum age limit is 18 years.
- Annual income should not be more than £80,000 and for a London resident not more than £90,000
- One cannot own any other home to purchase one through a shared ownership
- The person should not be in rent arrears and should not have any other mortgage obligation.
- Good payment history is necessary and also the capacity to make payments and pay fee or costs included in home buying.
The above points are generally applicable, but according to the lenders and your personal circumstances, some more terms and conditions may include. However, don’t worry, there is no huge change in what you do as formalities. It is never complicated to qualify for co-ownership mortgages if you follow some discipline in your personal finances. A mortgage company never says NO to a financially responsible applicant.
Costs of shared ownership
An estimation of costs can help do proper budgeting on home buying. A considerable amount of money goes in paying the costs of shared ownership. Here are the types of costs, fees that you need to pay for property purchase.
Solicitor fees – To handle all the legal formalities, the presence of a solicitor is necessary, and you need to pay a fee for that. Do not worry; this fee is based on the fixed cost.
Deposit – The deposit requirement for shared ownership is 5% to 10% of the property shared you are buying. If you are buying 30% of a home of £400,000, your share will be £1,20,000. Your deposit amount should be (5%) 6000 or (10%) 12000.
Stamp duty – Although there is no stamp duty up to £300,000 but beyond that 5% stamp duty is applicable. It is the latest updated after making changes that were announced on 8 July 2020. There are different slabs of stamp duty according to the price of the property. We introduce you to every required detail related to stamp duty at the time of mortgage procedure.
Moving costs – It usually has a minimum of £3,000 to a maximum of £5,000. The housing associations usually expect you to keep an amount around these two figures to pay the costs. According to the location, the moving costs can vary.
Service charges (annually) – Shared ownership properties are leasehold, and the housing associations take service charge for providing certain services. For example, money for the maintenance they provide is taken through the service charges. Before you take the mortgage, always confirm the cost on this part.
All the above costs are considered during the affordability check through the shared ownership mortgage calculator. You can use the calculator as many times as you need. With different deposit and interest rate figures, it is easy to get a better picture of what is the final and best deal for you.
Can I get a staircasing mortgage?
Of course, you can borrow funds through a mortgage for staircasing and buy a bigger share of the property. Shine Mortgages offers a wide range of staircasing mortgages offered by renowned lenders in the UK.
You can staircase a property in two ways –
- Advance from the lender – Your current lender offers mortgage according to the equity you have earned on the property. That advance payment needs to be paid off through the repayments.
- Remortgaging – Through a remortgage, you can borrow an extra amount to pay the bigger share of the house. It is not required to tell that all affordability rules are applicable and you need to have a good current income status.
Every time you staircase the property, the valuation of the home occurs and the final price of the additional part you want to buy is affected by that. Shine Mortgages scrutinizes the financial details and suggests for the best possible option to staircase your share in the property. The bigger is the share, the lesser is the property rent.
Is it possible to get a shared ownership mortgage with a poor credit score?
Yes, it is possible to attain funds through bad credit shared ownership mortgage. You should have several conditions to get the funds with poor credit situation.
The payment issues should not be recent – Missed or pending payment issues can be accepted if they are not latest. Flaws in financial behaviour in history can be avoided, but if the issues resist currently, your mortgage efforts may obtain a bit more attention.
Higher deposit – This condition is predictable in most of the mortgage products. If you buy with a poor credit score, it needs to be compensated with a larger deposit amount. Generally, the minimum limit of the deposit is 5% or 10%, but in the case of poor credit, 15% to 20% is necessary.
Stay in the same job for long – The factor of employment stability is always a concern for the lender and a borrower who changes his job frequently sounds risky. Stay in a job for a long time to prove that you play safe in career and thus the income security is there.
Bring a financially strong guarantor – A guarantor with a sound financial background can always play the role of a game-changer. Good income, good credit score are the two important pillars on which your mortgage chances can stand strong.
With the right type of advice, we can help you buy shared ownership properties for sale in the UK despite the bad credit. At the same time, we reveal the realities because we do not believe in making fake commitments.
Can I get a shared ownership mortgage if I am self-employed?
There is no constraint of employment status for shared ownership. You can borrow money as a self-employed, but it is always advisable to apply with minimum three or 3+ years of financial accounts. Few lenders consider the applicants with less than three-year accounts. The better way to play safe is to provide the details of the maximum required number of years.
Individual circumstances also matter a lot. At Shine Mortgages, we get into the depth of the finances of the applicants and their business stability factor. Then our experts find the best deals available on the panel. We offer fee-free advice to help you prepare your finances and apply to the best deals of shared ownership mortgage for self-employed. Our efforts are always focused on delivering ease. We support you to explain about your business to the lender because sometimes the mortgage companies fail to understand the type and nature of business.
Considerations that make shared ownership easy
Before you get on the property ladder with shared ownership, consider the following points. You cannot neglect them due to their vital presence as the ultimate facts for every home buyer.
- The most convenient and wise way to find a shared ownership property is to find an agent of the related locality.
- Buying a shared ownership property with a housing association is completely different from buying a house with a relative or friend.
- To get a bigger share of the property through staircasing, the price you pay will be affected by the latest value of the home.
How can a shared ownership mortgage broker help?
The significance of a mortgage broker for a shared ownership mortgage is easy to explain with some precise reasons.
- Buying a home through shared ownership exposes you to specific conditions that are not common in other types of home buying. As an example – not all lenders offer such mortgage; in such conditions, an ignorant borrower can lose the direction to the right path.
- The income cap makes the mortgage formality part even more difficult. A broker knows how to prove that certain limit of income with the required and due documentation. They explain well the calculation of basic income and additional income such as commission.
- A broker knows the market well and has affordable options of the lenders on its panel. It can suggest you the most relatable deals without any waste of time and confusion.
- Most of the buyers are ignorant about how the shared ownership works. Also, they are not sure if it is suitable for them or not. A broker who is aware of the nook and cranny of the home buying types and mortgage types can explain everything.
Besides the above points, you can personally understand the importance of a broker with its 24x7 assistance and the capacity to offer quotes in a few minutes. Above all, you have someone to handle the annoying documentation part. We have all these qualities with best-shared ownership mortgage lenders in the UK.
How can I buy shared ownership resale property?
The process to buy a resale shared ownership property is similar to buying a new build house. The only difference is that the buyer has to buy a share equal to his current share in the property or more than that. Maximum (as decided already) he can go up to 75%. This rule is applicable all across the UK. Shine Mortgages arranges your deals with lenders that deal in the resale property. With easier access to funds, we make the mortgage process predictable.
Shine Mortgages is known for its professional mortgage broker services without any delay. Our aim is your financial well-being and comfort during the borrowing process. To facilitate both, we work with the best experts in the industry to find you the correct solution. We talk to you, sit with you as many times you want and do not stop until we end our interaction with fund disbursement in your account. Want to get into a deal with us? Then why to wait, we are right here, leave a query and we will reply IMMEDIATELY.
Why Choose Shine Mortgages
With us, you can get the hassle-free experience of borrowing funds, and there are ample reasons for that which you read below –
- Multiple choices of shared ownership mortgage lenders
- Both fixed and variable rate options are available
- Bad credit deals are available
- Leave all the formalities and application procedure on us
- The Commitment of customer-friendly mortgage options
- The dedicated team of experts to provide 24x7 assistance
- We have no broker fee and no hidden charges
The mortgage for shared ownership works in a bit different manner than the other mortgage types. It is the only property purchase where the owner does not own the whole property. This situation makes it necessary to find mortgage deals with expert knowledge and Shine Mortgages possesses that knowledge. Visit us online or call on our number available round-the-clock and get instant choices for your mortgage needs..
- Payday loans boost credit rating
- Checking your report hurts your credit score
- In bad credit, you need to wait for seven years to get a mortgage
Payday loans boost credit rating
Many people think that when they get a payday loan, their credit score improved. The loan has a high-interest rate and paying off such obligation on time leaves a good impression on their financial records. Sometimes people intentionally take the loan before applying for a mortgage. THE REALITY IS – a high-interest loan is always considered, as the weakness of the borrower. The reason is no one takes the burden of high rates and hefty instalments until there is no sever financial crisis. If someone has taken that, indeed it is due to some severe financial conditions.
Checking your report hurts your credit score
No, never. Checking a credit rating never hurts or reduces the credit report. A credit score gets affected only when you or a lender check your affordability for a loan through a hard credit check. Besides this, if you apply to many lenders for a loan and do that frequently, it spoils your credit score performance. The advisable thing is to check the score at regular intervals.
In bad credit, you need to wait for seven years to get a mortgage
It happens only in the case of CCJ, IVA or Bankruptcy. In a normal poor credit situation, you do not need to wait. Instant application for a shared ownership mortgage is possible. The vital factor is that low credit issues should not be recent. Older is the issue of the low credit rating; better are the chances of mortgage approval.
What is Shared ownership?
Shared ownership is an affordable way of buying a house with a housing association. You can buy a certain percentage of a home from a minimum of 25% to a maximum of 75%, and the association owns the rest of the part. For the share that you do not own, rent needs to be paid to the housing company. It is possible to buy a bigger share than the maximum limit but if you can afford to do that.
Is it hard to get a shared ownership mortgage?
No, it is not hard to get a mortgage for shared ownership. It is designed majorly for those who cannot afford to bear the full property value. It is a government scheme to inspire affordably home buying and provide shelter to more and more people. If you are buying the minimum share of 25%, the mortgage amount is quite less and thus the repayments too. A person, even with a lower income, can easily afford to do that.
Is shared ownership only for first-time buyers?
Shared ownership is for two types of borrowers
- First-time buyers
- Who owned a house but now cannot afford to buy any more
Any person who falls under this category can always try his/her chance for the shared ownership home buying. Besides, the government rules keep changing, but currently, it is the situation in this type of home purchase.
What happens to my shared ownership property when I die?
The case of death of a homeowner through shared ownership drives attention to three different conditions. According to the situation only, the final action takes place.
- When you die with a will – As we all know, if you die and leaves a will with the mention of a successor to the home, it passes on to the concerned person.
- When you die without a will – In this condition, the half share of the house is given to the life partner wife/husband, and the other part goes to the children equally.
- If you die but have a joint tenant – The case is clear here, the joint tenant takes the burden of the obligation as well as the right on the house.
What is the difference between help to buy and shared ownership?
There is a clear difference between the two as both serve for different purposes.
|Shared ownership||Right –to-buy|
|It is designed for those with lower income to help them buy the house.||It is designed to help the occupants of a council house buy the same.|
|Through shared ownership, you can buy any new home constructed under the scheme.||To buy a house under the right-to-buy scheme, you have to stay in that house for minimum of three years.|