Interested in getting a shared ownership mortgage? Unsure what it entails or how to go about applying for one? Well, we’re here to unlock the mystery of shared ownership mortgages with this comprehensive guide.
- What Are Shared Ownership Mortgages?
- Are You Eligible For A Shared Ownership Mortgage?
- How To Apply for a Shared Ownership Mortgage
- Advantages and Disadvantages of Shared Ownership Mortgages
- How To Choose The Right Shared Ownership Mortgage For You
- Get In Touch With Our Friendly Shared Mortgage Advisors Today
What Is a Shared Ownership Mortgage?
At The Levels Financial, we know how daunting it can be to make that first step onto the property ladder. Shared ownership mortgages could be your answer, as they have been specifically designed to assist first-time buyers with the home-buying process.
A shared ownership mortgage is slightly different to other first-time home ownership mortgages, as rather than purchasing the whole property, a shared ownership mortgage means you only have to buy a share. So, you will have to pay your mortgage (on the share that you own) and on the remaining you pay rent.
Who Owns The Property?
It’s a part-buy, part-rent scheme where you buy a share of the property and pay rent on the rest. But don’t worry, effectively the property is yours and typically the part of the property you don’t own is owned either by a housing association or occasionally it could be a private developer. Normally the organisation you purchase your initial portion of the property from. They will be who you pay the mortgage to.
If you’re trying to grasp the basics and eligibility of shared ownership mortgages, we’ve got you covered.
Are You Eligible For a Shared Ownership Mortgage?
Shared ownership mortgages are a fantastic way to climb or re-enter the property ladder, and our team at The Levels Financial is ready to provide expert advice and assistance tailored to your unique situation.
You’re eligible for a shared ownership mortgage, if you fit into at least one of these brackets: if your household income is £80,000 a year or less, you’re a first-time buyer, or you used to own a home but can’t afford to buy one now. Our shared ownership mortgage advisors are here to help you understand every detail and navigate the process.
It is also important to keep in mind the changing base rate and how it could impact your mortgage repayments. To learn more about the base rate and how it can affect you, see our latest blog post, ‘August 2023 interest base rate rising – how can this impact you?’
How To Apply for a Shared Ownership Mortgage
It’s essential to understand the application process when you’re looking to secure a part buy, part rent agreement. Applying for a shared ownership mortgage can seem daunting, but don’t worry, we at The Levels Financial are here to help.
Here’s a quick rundown of what to expect when liaising with us:
- We first recommend getting some shared mortgage advice from a reliable source. (Quick reminder that at The Levels Financial, we are award-winning mortgage advisors with a history of providing up-to-date and reliable information.)
- It is then recommended that you start applying for a shared mortgage, this will highlight what type of rates will be available to you and can help you find your budget.
- As part of the application process, you will need to provide proof of income and other financial documents. Our team can help you with all of the paperwork.
- Once you know what you can afford and if you’re eligible for a shared ownership mortgage, you can start looking for a property which is part of a shared ownership scheme.
- Finally, once you’ve found a property and if your shared mortgage applications are approved, you’ll be on your way to owning a part of your dream home!
For more information about how to apply and how to increase your chances of mortgage approval, see our blog posts: ‘5 steps to increase your chances of mortgage approval’ and ‘How to save for a mortgage in the cost of living crisis’.
Advantages and Disadvantages of a Shared Ownership Mortgage
Before deciding on any type of mortgage, it is important to gather all of the information and make an informed decision, taking into account your circumstances and financial situation. Organising a mortgage is one of the largest decisions you can undertake, which is why it is always important to fully understand every aspect of it.
Below we have highlighted all of the advantages and disadvantages of a shared ownership mortgage:
| Advantages | Disadvantages |
|---|---|
| Can buy as little as 10-25% of a property. | You will be paying rent and your mortgage payments monthly |
| Takes the pressure off saving for a large house deposit. For a shared ownership mortgage, you usually need a deposit between 5% and 10% of the share you’re purchasing. | You will still be responsible for all maintenance, repairs and running costs, despite only owning parts of it. |
| Flexibility to increase your share over time. This is often known as ‘staircasing’ where you will be able to buy more of your home, in increments as low as 1%. | If house prices were to fall, shared ownership buyers may find themselves in negative equity (the value of your property is less than the amount you own on your mortgage). |
| You don’t normally have to pay stamp duty land tax on the initial purchase. (See our stamp duty calculator to learn more). | Selling can be difficult if you do not own 100% of your property. Often the housing association or house developer who owns the other portion of your house will have first refusal on buying the property before it can be put on the marking. Once on the open market, future buyers must be able to fulfil the part owner’s eligibility criteria, potentially reducing the number of buyers. |
| Your monthly repayments may work out cheaper than if you had a general outright mortgage. |
How To Choose The Right Shared Ownership Mortgage For You
Choosing the right mortgage option for your situation isn’t always easy, but our expert advisors at The Levels Financial can help streamline the process. With a variety of shared ownership mortgages to choose from, it’s crucial to select the one that best suits your financial capabilities. With access to over 1200 mortgage rates from over 90 lenders, our team can work with you to find what will best work for you.
Like traditional mortgages, with shared ownership mortgages you can also choose to take out fixed-rate mortgages, variable mortgages, discounted variable mortgages and more. To see a full list of the different types of mortgages available, speak to our helpful and knowledgeable team.
When applying for your shared ownership mortgage, it is always important to consider anything that could affect it in the years to come. This is why we always recommend our clients think about the following:
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- Assess your financial status: Determine how much you can afford to borrow and repay. Bearing in mind that this could change depending on which mortgage type you choose.
- Understand the terms: Each mortgage has different rates, terms, and conditions.
- Look at the bigger picture: Consider the overall cost of the mortgage, not just the monthly payments.
- Get professional advice: Schedule a free consultation with The Levels Financial for personalised guidance.
- Stay patient: Finding the right mortgage takes time, but it’s worth the effort.
Secure Your Shared Ownership Mortgage Today
Here at The Levels Financial, we are here to help you. Our team offer expert and professional advice and answers for all your shared ownership mortgage questions. (See our Google reviews for an idea of who we have worked with in the past.)
If you want to take that first step onto the property ladder or return to the property ladder with a shared ownership property, contact our team today and we will be more than happy to help, call us on 01458 772040 or email us at admin@thelevelsfinancial.co.uk.
Because we have your best interests at heart, you need to know that if you do not keep up with your mortgage repayments your home may be repossessed. A fee may be included for mortgage advice. The actual mortgage amount you pay will differ depending on your circumstances. Fees can be up to 1%, but typically a fee is 0.3% of the borrowed amount.
