It is common knowledge that one of the biggest hurdles to getting onto the property ladder is saving a deposit and having enough income for the required mortgage, especially with living costs increasing. In the UK according to the money advice service, the average cost of living in the UK is £14,945 pounds per annum with the deposit needed for a mortgage in the region of £45,600 pounds.
This results in many first time buyers finding it a huge challenge to meet these requirements and being priced out. So could shared ownership mortgages be the answer ? This scheme is not everyone’s ‘cup of tea’ but with a huge overhaul and reform coming later in 2021 and deposit requirements starting as low as £3,000 for a 95% shared ownership mortgage, this could be your way onto the property ladder.
Some of our clients’ have reported that once they are on the property ladder using a shared ownership mortgage, they tend to increase their shares and often purchase the property outright. This process is known as ‘staircasing’. Add to this the fact that once the shared ownership reform has been introduced, you will be able to increase your shares by minimum increments of just 1%, rather than the current 10 – 20% requirements. This is one of the downsides to shared ownership which the new scheme would remove.
Using shared ownership as a stepping stone
But the beauty of shared ownership is that you can also use it simply as a stepping stone onto the property ladder. This means you obtain a mortgage which will lead to the start of a history of mortgage payments, improving your chances of success when it comes to buying a property outright.
Access to larger properties
Shared ownership allows access to larger properties, than you otherwise would have been able to look at when buying outright. If you are on a single income or a low income initially, the fact that you buy a share of the property and rent the remainder from the housing association, means the overall monthly cost is more favourable. See the example below.
Shared ownership mortgage example
If you are on an income of £22,000 for example, the loan amount available to you would be around £100,000. If you have a family to care for as well, this may not get you a property with the amount of space you need. However, with a shared ownership mortgage, the properties available to you could be in the region of £200,000, meaning increased options and a selection of larger properties to choose from. It’s a win-win.
Mortgage Chain offer shared ownership mortgages and specialise in the service for First Time Buyers.
Our service which specialises in shared ownership mortgages, we are aware of the large amount of different mortgage criteria, shared ownership mortgages bring and our goal is to pair you with the correct shared ownership mortgage lender, first time, so you do not need to waste time searching yourself !
95% Loan to value on all houses and flats – New build and second hand
You may have started your own mortgage research but maybe you have been left unsure what all the mortgage criteria means and how it reflects your own criteria ? At Mortgage Chain we understand shared ownership mortgages inside out and can make your process seamless, whether you are buying new build shared ownership properties, staircasing (buying more shares), or purchasing with a 25% share. Mortgage Chain know shared ownership criteria inside out! We even have lenders that will lend up to 95% of your share on New Build Flats!
Mortgage Chain has access to a large selection of shared ownership mortgages that allow you to purchase as little as a 25% share in a sizeable housing association house; move straight in, and then increase your level of ownership over time.
The deposit amount is based on the amount of share purchased eradicating the need to have large deposits and mortgages for a new home.
Overtime as employment prospects increase or your partner starts work for example, you can purchase your property in stages until you own the full amount.
The remaining share (that you do not own) you would pay a small rent to the housing association. This can be a fantastic solution to stay in the location you prefer and live in the property suited to your requirements.
The Pros and cons of shared ownership mortgages – Watch this video BEFORE you look for Shared Ownership Properties. Shared Ownership Properties can be an excellent alternative if you can’t yet get onto the property ladder the traditional way. However, there are advantages and disadvantages. In this video I provide the pro’s and con’s of Shared Ownership purchases and a “Must Know” list you can download and check when buying your shared ownership property and obtaining your shared ownership mortgage. You MUST check with the housing association – Do not get into a shared ownership deal until you know everything within the terms and conditions.
Shared Ownership Mortgages
Here is a list of critical items you must ensure are covered by the housing association that is selling the property. You can download this list as a PDF at the bottom of the list. Be sure to find out this information.