Shared ownership is a great way to get on the property ladder. Traditional schemes are provided through housing associations.
Buyers can purchase a share of a home which is advertised as part of via a housing association scheme (between 25% and 75% of the home’s value) and pay rent on the remaining share. Buyers will need to take out a mortgage to pay for their share of the home and the deposit amount is based on the share of the property the buyer is purchasing (usually at 5%). As a buyer’s finances improve, they can buy more shares in their home. This is known as staircasing and, as the percentage of share that a buyer owns increases the rent paid will reduce. The rent is calculated by the Housing Association and will be disclosed before application and a mortgage lender will take this into account when assessing what a buyer can afford.
Example of a shared ownership purchase
| Full property value | £250,000 | |
| Share purchased value | 50% | £125,000 |
| Deposit available | From 5% | £6,250 |
| Mortgage | £118,750 | |
| Rent is paid to the Housing Association on the 50% of the property not purchased | ||
Your home may be repossessed if you cannot keep up the repayments on any mortgage or other loan secured upon it.
