In shared equity you agree to own a percentage of the property and this is shared with a builder or the Government, the split can vary but is typically 85% owned by you and 15% owned by the other party. Shared ownership differs in as much as you will pay rent on the portion of the property you don't own.
Yet another variation is in a share to buy mortgage. Rather than arranging a deal with a housing association or builder, individuals decide to get together and agree a share of the property. Normally, its family members or friends who decide to get together and purchase the property.
As such you will still have an agreed percentage of the equity but Joint ownership of the property is held by private individuals and not the Government.
Shared ownership mortgages - what are they?
Very popular with first time buyers because the deposit you put down only needs to cover the percentage of the property that is owned by you. In many cases the smaller deposits required make the difference between owning your own property or not.
Calculating the rent
The housing association to whom you will pay your rent will give you the calculations and they will ask your mortgage broker/lender to assess your affordability.
The client I have just helped their rent was 2.75% of the share owned by the housing association. The share was 70,000 pounds and the rent was 211.25.
Are mortgage products the same if I buy a shared equity/ownership house?
No, not all lenders will consider lending on shared ownership/equity homes. It is recommended you find out what is available before you start looking for your dream home.
Do I earn too much to qualify for a shared ownership?
Please use care before you take the plunge. I have examples where clients have paid non refundable mortgage booking fees only to realise later on that they earned too much. Work with a good broker who knows what can and can't be done.
Is there an easy way to determine the deposit needed?
There's no easy answer here as it depends on how much of the equity share you are buying. Some lenders will advance up to 95% of the loan to value of the share you purchase whereas others will not. Deposits will vary so you will need to check with your lender.
As an example lets suppose you bought a 25% share in a property valued at 210,000 pounds. If a lender wanted a 5% deposit then you would need 2625 pounds. Buying 50% of the share in the property would work out at 5250 pounds based on a 5% deposit rate.
Are shared ownership mortgages hard to obtain?
Yes and no, as long as you and the property you wish to purchase meets the lenders criteria. Like all mortgages these days each one is assessed against the lender criteria which your broker should be aware of.
Getting a loan should be straightforward enough. Unfortunately the theory doesn't quite work in practice. Lenders often have very individual requirements when it comes to arranging a loan or advance.
We have a legal requirement to include the following:- Your home may be at risk if you do not keep up repayments on your mortgage.
This is the first in a series of home and mortgage related articles which I hope will help you. - 31387
Yet another variation is in a share to buy mortgage. Rather than arranging a deal with a housing association or builder, individuals decide to get together and agree a share of the property. Normally, its family members or friends who decide to get together and purchase the property.
As such you will still have an agreed percentage of the equity but Joint ownership of the property is held by private individuals and not the Government.
Shared ownership mortgages - what are they?
Very popular with first time buyers because the deposit you put down only needs to cover the percentage of the property that is owned by you. In many cases the smaller deposits required make the difference between owning your own property or not.
Calculating the rent
The housing association to whom you will pay your rent will give you the calculations and they will ask your mortgage broker/lender to assess your affordability.
The client I have just helped their rent was 2.75% of the share owned by the housing association. The share was 70,000 pounds and the rent was 211.25.
Are mortgage products the same if I buy a shared equity/ownership house?
No, not all lenders will consider lending on shared ownership/equity homes. It is recommended you find out what is available before you start looking for your dream home.
Do I earn too much to qualify for a shared ownership?
Please use care before you take the plunge. I have examples where clients have paid non refundable mortgage booking fees only to realise later on that they earned too much. Work with a good broker who knows what can and can't be done.
Is there an easy way to determine the deposit needed?
There's no easy answer here as it depends on how much of the equity share you are buying. Some lenders will advance up to 95% of the loan to value of the share you purchase whereas others will not. Deposits will vary so you will need to check with your lender.
As an example lets suppose you bought a 25% share in a property valued at 210,000 pounds. If a lender wanted a 5% deposit then you would need 2625 pounds. Buying 50% of the share in the property would work out at 5250 pounds based on a 5% deposit rate.
Are shared ownership mortgages hard to obtain?
Yes and no, as long as you and the property you wish to purchase meets the lenders criteria. Like all mortgages these days each one is assessed against the lender criteria which your broker should be aware of.
Getting a loan should be straightforward enough. Unfortunately the theory doesn't quite work in practice. Lenders often have very individual requirements when it comes to arranging a loan or advance.
We have a legal requirement to include the following:- Your home may be at risk if you do not keep up repayments on your mortgage.
This is the first in a series of home and mortgage related articles which I hope will help you. - 31387
About the Author:
Looking to find the best deal on shared ownership mortgages, then visit www.vibrantventures.co.uk to find the best advice on shared equity mortgages for you.
