It is the most common affordable purchase option, quite simply you purchase a share of the property, with the remaining proportion being retained by a Housing Association who then charge a monthly rent. Share values vary but most commonly they are between 30% and 50%
Once you have owned your share for a fixed period you can “staircase” out and buy further shares enabling you to own more of the property. As your share of the property with a mortgage increases your rent payable to the Housing Association decreases.
The great news is that we have dealt with shared ownership mortgage clients since we began trading, and have helped many to own 100% of the house after only a few years, depending on their circumstances.
You are eligible for shared ownership if your annual household income is £80,000 or less, and you are not named on another mortgage.
A brief example:
Mr Smith earns £23,000 a year, and is currently paying £700 rent, Mr Smith has no loans, credit cards, or student loans, and has a clean CREDIT HISTORY
Mr Smith finds a Shared Ownership property for £58,500, this is a 30% share of the full market value which is £195,000. As he is purchasing 30% he will pay rent to the housing association of £370 a month on top of his mortgage for the remaining 70%.
Mr Smith needs a minimum deposit of £2,925, solicitor fees of £2,000 and £349 for using Mortgage Light's services. In this case there is no valuation fee, so the total monies Mr Smith needs to find to buy the home is £5,274.
Mr Smith opts for a 30 year mortgage which has a payment of £265 per month.
TO CONCLUDE In this example you are able to buy 30% of the property with £5,274 ofupfront monies. Once purchased the monthly cost for Mortgage and Rent combined is £635…..which means it can be cheaper than renting and you are on the property ladder!