Getting on to the property ladder is hard, especially if you are young or a low-income earner. But thanks to a number of government schemes, it has become a lot easier in recent years. If you are a first-time buyer, you can now take advantage of schemes to help you save for a deposit, to finance your home with low-interest mortgages, alongside the Help to Buy and shared ownership scheme.
And in fact, if you can’t afford a large house deposit, the shared ownership scheme may be the perfect thing to consider.
What is shared ownership?
Shared ownership is exactly what it says it is. You share the ownership of a property with a third-party – typically a Housing Association. You pay rent to the Housing Association on the percentage that you don’t own and have a mortgage for the percentage or ‘share’ that you do.
Share values vary, but most commonly you can purchase between 25-50% of a property. Depending on the terms of your lease, you can usually ‘staircase’ over time and purchase further shares in your property. This will reduce the amount of rent you pay and, of course, increase your ownership.
Are you eligible for shared ownership?
Shared ownership is very accessible, however there are a few terms and conditions that you must fit into in order to qualify for the scheme. These include:
- Being 18 years old or over
- Not owning another property (if you do you must be in the process of selling it)
- Not being in rent or mortgage arrears (you will be asked to provide evidence of this)
- You must not have an annual income of over £80000 a year (over £90000 in London)
- Needing a deposit for the share portion you are buying – usually 5 – 10% of the value
Benefits of shared ownership
There’s a reason why this scheme is so popular! It holds many benefits, including:
- A way to buy a property without a high deposit
- The stability and security of homeownership
- Affordable for first-time buyers or low income households
- Usually cheaper than private renting a property
- Once you’ve bought a portion you may be able to buy the rest of your property, so you own 100% of your property.
Is shared ownership right for you?
Before taking on the responsibility of a shared ownership mortgage, is it important that you seek financial advice from a professional. Speak to a mortgage advisor and broker who can help you to decide what is right for you and your household.
Are you looking into shared ownership for buying a property?