Last Updated: February 2nd, 2024 at 6:39 pm
Shared Ownership Mortgages can raise many questions, especially for those new to the concept. This FAQ section aims to clarify common queries, providing straightforward answers to help you understand this homeownership option better. From basic inquiries to more complex aspects, we cover a range of topics to offer you comprehensive insights into Shared Ownership Mortgages.
A Shared Ownership Mortgage allows you to purchase a part of a property (usually between 25% and 75%) and pay rent on the remaining share, which is typically owned by a housing association. This scheme is designed to make homeownership more accessible, especially for first-time buyers and those with limited budgets.
Eligibility usually includes criteria such as a household income of £80,000 a year or less (£90,000 or less in London), being a first-time buyer or a previous homeowner who can’t afford to buy now, or being an existing shared owner looking to move. Additionally, you must prove that you cannot afford to buy a home outright on the open market.
Yes, you can sell your share of the property. The housing association has the ‘first right of refusal’ to buy it back or find a buyer. If you own 100% of the property, you can sell it on the open market like any other home.
In addition to the mortgage on your share, you will also pay rent on the remaining share owned by the housing association. Other costs include a deposit, solicitor fees, mortgage arrangement fees, and potentially service charges and ground rent.
Staircasing allows you to increase your share of the property over time. You can buy additional shares in your home (usually in increments of 10%) based on the current market value. As you buy more shares, your rent decreases proportionally. This process involves getting a new valuation of the property, additional mortgage arrangements, and potentially legal fees.
If the property value increases, the cost of buying additional shares (staircasing) will be higher. Conversely, if the property value decreases, the shares will be cheaper to buy. The change in value also affects the amount you receive when selling your share.
You can make changes or improvements to the property, but for significant alterations, you may need to get permission from the housing association. These improvements can potentially increase the value of your home, which is beneficial if you decide to sell your share.
Priority for Shared Ownership properties is often given to local residents, key workers, or those with a particular need for housing in the area. Additionally, military personnel are given priority under certain circumstances.
Owning a share in a property can impact your eligibility for other mortgage products. If you fully staircase to 100% ownership, your situation becomes similar to that of other homeowners. However, partial ownership can limit your options for remortgaging or buying another property.