Shared ownership
Your path to affordable homeownership
Another great way of getting onto the property ladder is through shared ownership. This scheme is particularly beneficial for first-time buyers, those who have previously owned a home but can’t afford to buy one now, and people whose incomes are below a certain threshold. It offers the security of homeownership while sharing the financial burden with a housing association or private developer. It is also a great alternative for those who cannot afford all the deposit and mortgage payments for a home that meets their needs.
With this scheme, you can buy a share of a property and pay rent to a landlord on the rest. The initial share you can buy is usually between 25% and 75%.
For example, if you are looking to buy a property worth £250,000, and you are eligible for a 25% share, you would have to finance £62,500 of the property and rent the remaining 75% from the housing association. This approach could be an option for those with a smaller deposit, making it easier to get onto the property ladder.
Purchasing a shared ownership property allows you to build equity over time and offers the security and stability of homeownership. You’re investing in your future and can benefit from property value appreciation, as opposed to renting a house.
The rent you pay on the unsold share is usually below market rate, potentially making it more affordable than renting the entire property privately. Over time, you have the option to buy additional shares in the property, a process known as “staircasing,” which can eventually lead to full ownership.
When purchasing a property through a shared ownership scheme, you must undergo an affordability assessment conducted by the housing association. This assessment evaluates your financial situation, including income, expenses, and credit history, to ensure you can comfortably afford the costs associated with the purchase and ongoing maintenance of the property. The outcome of this assessment is crucial, as it determines whether you are eligible to proceed with the purchase of the selected property. It is designed to protect both the buyer and the housing association.
If this is something you would like to find know more about from a mortgage adviser, look no further, we are here to help: get in touch with us today, and let’s have a chat!
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The information provided on this website is for general informational purposes only and should not be considered as financial advice. While we strive to keep the information accurate and up to date, we make no guarantees regarding the completeness, accuracy, reliability, or suitability of the information contained herein. Any reliance you place on such information is strictly at your own risk. We recommend consulting with a qualified financial adviser or mortgage adviser before making any financial decisions. The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK.
Danube Financial Solutions LLP is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Danube Financial Solutions LLP is registered in England and Wales with company number OC454931. Registered address: 6 Peacock Way, Worksop, S81 7SU
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