What is shared ownership?
Brian McCarthy talks us through the topic of shared ownership ...
Shared ownership is similar to shared equity, except that the client purchases a share of the property (typically 25%, 50% or 75%), but also pays an occupancy charge based on the share remaining after purchase. So the client will have mortgage payments to make, in addition to an occupancy charge, but with good planning this can still work out less or similar to what the client would expect to pay in rent on the open market.
Such arrangements are typically offered by social landlords such as housing associations, (e.g. Lothian Homes, Dunedin Canmore, Port of Leith Housing Association) and there are various new build developments across Edinburgh, Fife and the Lothians. The deposit requirement for shared ownership is higher than shared equity, typically between 10% and 25% of the share purchased depending on the mortgage provider. However, this can still be an affordable amount for many people, particularly if only purchasing a 25% share.
The size of share
The decision on the size of share to purchase will largely depend on the client circumstances and affordability, taking into account mortgage repayments/occupancy charge and other financial commitments. Applications need to be made directly to the social landlord and certain criteria need to be met to be eligible for such a scheme.
Therefore such arrangements are not suitable for everyone, but can provide a cost effective way of establishing a foothold on the property ladder. There are only a small number of mortgage providers who offer mortgages on shared equity and shared ownership and there are terms and conditions that vary considerably.
Thus, it would be important to discuss your requirements with us at ESPC Mortgages if you are thinking of choosing either of these options.
Want to know more?
Brian McCarthy is a Financial Planning Consultant who aims to help those who need help finding mortgage solutions. You can call him on 07956 969 859 for more information.
Read some of Brian's other articles:
- What is shared equity?
- Can you tell me about income replacement cover?
- New developments for first time buyers
The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.