Shared ownership is a government-backed scheme that allows you to buy a share of a property, typically between 10% and 75%. You then pay rent on the remaining share to a housing association. This can be a more affordable way to get on the property ladder, as you need a smaller deposit and your monthly payments will be lower than if you bought a property outright.
To be eligible for shared ownership, you must meet certain criteria, such as having a household income of less than £80,000 (or £90,000 if you live in London). You must also be a first-time buyer or have owned a home in the past but can no longer afford one.
There are two types of shared ownership mortgages: fixed-rate and variable-rate. Fixed-rate mortgages have an interest rate that stays the same for a set period of time, while variable-rate mortgages have an interest rate that can go up or down.
Shared ownership can be a good option for people who want to get on the property ladder but don’t have a large deposit.
Here are some of the pros and cons of shared ownership
Pros
- You can get on the property ladder with a smaller deposit.
- Your monthly payments will be lower than if you bought a property outright.
- It’s a government-backed scheme, so it’s more secure than other types of property ownership.
Cons
- You’ll still have to pay rent to a housing association.
- You may have to pay higher mortgage rates than if you bought a property outright.
- There are limited lenders who offer shared ownership mortgages.
- You may be limited in the type of property you can buy.
- You can’t rent out the property under the scheme.
If you’re considering shared ownership, it’s important to speak to a mortgage advisor to get more information and to see if it’s the right option for you.
Here are some additional things to keep in mind about shared ownership:
- You can staircase, which means increasing the share of the property you own. This can be done when you remortgage.
- You can sell your shared ownership property, but you may have to give your housing association first refusal.
- Shared ownership properties are often leasehold, which means you’ll have to pay ground rent and service charges.
Shared ownership can be a good option for people who want to get on the property ladder, but it’s important to weigh up the pros and cons before making a decision.
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