Understanding Shared Ownership Mortgages with Greenacre Financial Services
For many first-time buyers, the dream of owning a home and getting onto the property ladder can seem out of reach due to high property prices and substantial deposit requirements. Why consider shared ownership mortgages?
Shared ownership schemes offer a more accessible and affordable path to homeownership, particularly for those struggling to save for a large deposit. At Greenacre Financial Services, we’re to help you navigate the world of shared ownership mortgages, ensuring you make informed decisions about your first home.
What is a Shared Ownership Mortgage?
A shared ownership mortgage allows you to buy a share of a property (usually between 25% and 75%) and pay rent on the remaining share, which is owned by a housing association or landlord. This scheme is designed to help individuals who may not be able to afford a full mortgage outright, providing a stepping stone to full homeownership.
How Does a Shared Ownership Mortgage Work?
When you buy a share of a property, you will need a mortgage to cover that share. For example, if you buy a 50% share of a £200,000 property, you will need a mortgage for £100,000. The remaining 50% share is owned by a housing association, on which you will pay rent. Over time, you have the option to buy additional shares in the property (a process known as ‘staircasing’), potentially leading to full ownership.
Is it Hard to Get a Mortgage for Shared Ownership?
Obtaining a mortgage for shared ownership properties can be easier than securing a standard mortgage. Lenders recognise the reduced risk because the buyer is purchasing only a portion of the property, making it more affordable. However, like any mortgage, your eligibility will depend on factors such as your credit score, income, and outgoings. Working with a reputable mortgage broker, such as us at Greenacre Financial Services, can simplify the process, ensuring you find the best deal available.
Do All Banks Offer Shared Ownership Mortgages?
Not all banks offer shared ownership mortgages, but many do. It is essential to research and compare lenders to find one that provides favourable terms for shared ownership schemes. Our mortgage brokers at Greenacre Financial Services have extensive knowledge of the market and can guide you to lenders who specialise in shared ownership mortgages, increasing your chances of approval.
How Much Deposit Do You Need for a Shared Ownership House?
One of the significant advantages of shared ownership is the lower deposit requirement. Typically, you will need to put down a deposit of 5% to 10% of the share you are buying, not the property’s full value. For instance, if you are purchasing a 50% share of a £200,000 property, your deposit could be as low as £5,000. This makes shared ownership a more accessible option for first-time buyers struggling to save a large deposit.
Other Fees to Consider
While the deposit might be lower, there are other fees to consider when purchasing a shared ownership home. These include:
- Legal Fees: You’ll need a solicitor to handle the conveyancing process.
- Mortgage Fees: Lenders may charge arrangement fees.
- Valuation Fees: A property valuation will be required to secure the mortgage.
- Rent: You’ll pay rent on the share owned by the housing association.
- Service Charges: If you buy a flat, there may be service charges for communal areas.
Benefits of Shared Ownership
- Affordability: Lower deposit and mortgage requirements make it easier for first-time buyers to purchase a home.
- Potential to Increase Ownership: You can buy additional shares in the property over time.
- Stable Rent: Rent is typically lower than the market rate and regulated by the housing association.
- Home Improvements: You can usually make improvements to your home, subject to certain restrictions by the housing association.
Steps to Get a Shared Ownership Mortgage
- Assess Your Finances: Understand your budget, including how much deposit you can afford and your monthly expenses.
- Get Financial Advice: Consult with a mortgage broker to explore your options.
- Find a Property: Look for shared ownership properties that meet your needs and budget.
- Apply for a Mortgage: Work with your broker to apply for a shared ownership mortgage.
- Complete the Purchase: Once approved, your solicitor will handle the legal aspects, and you’ll complete the purchase.
Contact Us Today
Shared ownership mortgages provide a viable solution for those looking to buy their first home but are daunted by the high costs associated with traditional homeownership. By understanding how shared ownership mortgages work and seeking advice from experts like us here at Greenacre Financial Services, you can make informed decisions and take your first steps towards owning your home.
Whether you need help understanding the intricacies of shared ownership, finding the right lender, or calculating the deposit required, our team at Greenacre Financial Services is here to guide you every step of the way. Start your journey to homeownership today with confidence and ease.
For more information about any of our services, including shared ownership mortgages, please do not hesitate to get in touch by calling us on 0203 3939 222 or email info@greenacrefs.co.uk.
