The Shared Ownership scheme was introduced in the 1970s to help low income and first-time buyers get onto the property ladder. Today, it’s the most popular option for more affordably buying a home, and there are more than 200,000 Shared Ownership properties in the U.K. Even though the scheme is popular, there are many people who don’t realise that Shared Ownership is an option for them. So, how does it work and who is eligible?
What is Shared Ownership & how does it work?
If you’re on a low income, that certainly doesn’t mean that you’ll never be able to own a house. The Shared Ownership scheme is one available option designed to help those who may be struggling to scrape together the deposit for a home. This could be first time buyers, or those who were once on the property ladder and now can’t afford to get back on. You’re often able to buy into a Shared Ownership with no deposit – the only money needed is for solicitors and any mortgage fees.
Think of Shared Ownership as a middle ground between buying and renting. You buy a share (usually 30-50% initially) of a property owned by the Housing Association, and they keep ownership of the shares you haven’t bought and charge you monthly rent. Often this rent works out cheaper than renting a property from a landlord on the open market. The rent price is usually around 2.75% of the value of the property per year.
You can buy more shares over time, which is called ‘staircasing’. The more of the property you own, the more your monthly rent will decrease, until you eventually buy the final shares and own 100% of the property. Staircasing out of a Shared Ownership can take a little bit of time, but it enables you to buy a home without a big upfront cost.
Read more about how the Shared Ownership scheme works here.
Who is eligible for Shared Ownership?
Quite simply, if you are at least 18 years old with an income of less than £80,000 a year (£90,000 in London) and you don’t already own a property, then you will be eligible for Shared Ownership. You must also be able to obtain a mortgage.
If you’re over 55 and interested in the Shared Ownership scheme, you can go through the OPSO scheme (Older People’s Shared Ownership Scheme) to buy up to 75% of your home. Once you own 75% you won’t pay rent on the last 25%.
If you’re disabled you can of course go through the Shared Ownership scheme to own your own home, or you have an additional option of applying for the Home Ownership for People with a Long-term Disability (HOLD).
Who isn’t eligible?
The Shared Ownership scheme is designed to be accessible, so you generally shouldn’t encounter many barriers. If you earn over £80,000 a year (or £90,000 in London) or you already own a home that you can’t/won’t sell, you may not be eligible for the scheme.
Even if you have unsettled county court judgements (CCJs) in your name or if you’ve been made bankrupt or had an IVA (Involuntary Arrangement) in the last 3 years, so long as you can still obtain mortgage then you are likely to be eligible for Shared Ownership. Speak to us at Mortgage Light to see where you stand.
How can Mortgage Light help you?
Not every mortgage lender will offer Shared Ownership mortgages. Whilst they’re becoming easier to find, they’re not quite as simple as traditional mortgages.
Here at Mortgage Light, we know where to go for Shared Ownership mortgages and which lenders will be able to offer you the best options for your situation. With access to the entire market and years of experience dealing with Shared Ownership mortgages, we can help you make use of the scheme and own your first home after only a few years, without huge upfront costs. Contact us today and put yourself in the best hands.