Shared ownership mortgage broker
Shared ownership is a government-backed scheme designed to help first-time buyers start climbing that property ladder sooner. It allows you to buy a share of a home you’ll love, without compromising on the type of property you want to purchase.
Let’s get stuck into what shared ownership is and whether it might be right for you.
Quick summary
Shared ownership allows you to buy a share of a property (from 10% to 75% of the value of a home)
You make mortgage repayments on the part you do own and pay rent on the rest - the maximum you can be charged is 3% of the remaining share
You will still need to put down a deposit (usually a minimum of 5%) for the mortgage for the share you want to buy
Over time, you’ll be able to buy more shares of your home, helping you on your way to full home ownership
What is shared ownership?
Shared ownership is a ‘part-buy, part rent’ model. You buy a share of the property and pay subsidised rent on the remaining share to a housing association. This gives you the perks of owning your own place without the financial commitment of buying the full property all at once.
You’ll usually need a minimum deposit of 5% of the share you want to buy, though this varies by lender. But, because you only need a mortgage for the share you're buying, the deposit you’ll need is also often much lower and therefore more achievable. This could be great news if you’re a first-time buyer wanting to get on the property ladder sooner, without waiting to save up a hefty deposit for your first home.
Buying a shared ownership property can seem complex. But it doesn’t have to be.
Working with our brokers can give you the confidence you need to explore your home buying options. We will:
Guide you through the process step-by-step
Explain jargon in clear terms
Match you with a lender that accepts the shared ownership scheme
Compare your options & recommend the most suitable shared ownership mortgage for you
How does shared ownership work?
Before you even start looking at properties, it’s important to get your finances in order. Working with a mortgage broker can really come in handy! We will help you:
Check you meet the criteria for the shared ownership scheme
Find out how much you can afford to borrow, so you know what share you’ll be able to buy
Get your mortgage in principle to show you’re a serious, credible buyer
First, you’ll need to apply for the shared ownership scheme through your local Help to Buy agent. They’ll make sure you meet the eligibility and affordability criteria and, once you’re accepted, you can start your property search. If you’re buying in England, use the GOV.UK site to search for organisations that sell shared ownership homes in your area (similar schemes run slightly differently if you’re based in Scotland, Wales or Northern Ireland).
Now for the exciting part: house hunting! You can find shared ownership properties through housing associations, local councils and other providers, or search on property portals (many property sites allow you to use filters to find shared ownership homes).
Once you’ve found your perfect property, you’ll need to complete the housing association’s application form and pay a reservation fee. This takes the property off the market and secures it for you while you complete the next steps.
The fee will usually be around £500, and will be deducted from the final amount you pay on completion. However, you won’t get the money back if the sale doesn’t go ahead for whatever reason.
While you can apply directly with a lender, it can be invaluable to have an expert by your side to offer specialist advice. Your broker will compare shared ownership mortgage deals and help you decide the right option for you. Then, they’ll prepare and submit your application and manage the process on your behalf, saving you time and hassle.
If your lender’s happy with everything, you’ll receive a formal mortgage offer.
Just as you would when buying any kind of home, you’ll need a solicitor to handle all the legal aspects of the purchase. For example, they’ll conduct searches, review the lease from the housing association and manage the transfer of ownership.
Once the legal work’s done, you’ll exchange contracts and set a completion date. Completion is the final step, when the funds are transferred and you can finally pick up the keys to your new home.
It’s time to make your house a home! You’re now responsible for all the costs associated with being a homeowner, including your monthly mortgage payments, rent and any service charges. It’s also a good idea to set aside some cash in an emergency fund, too, as you’ll be responsible for all maintenance and repairs going forward.
Staircasing is the process of buying additional shares of your property until you own it outright. The price of the new share will be based on the property's market value at the time you decide to buy. While there are fees involved each time you staircase, it can be a fantastic feature that allows you to work towards 100% homeownership at your own pace.
There’s more good news, too - every time you buy extra shares, your monthly rent will drop accordingly. However, if you decide to take out a larger mortgage to increase your share, do remember that your mortgage repayments might increase accordingly.
Shared ownership example
Let’s say you want to buy a property worth £200,000.
You choose to buy a 50% share of the property, which means your share of the property is worth £100,000.
You put down the minimum 5% deposit of £5,000 so you need to get a mortgage for £95,000. As the mortgage is smaller than it would be if you were buying 100% of the property, your monthly repayments are likely to be more affordable.
The share of the property owned by the housing association is 50%, so £100,000.
You’ll need to pay rent on this share. Most landlords charge 2.75% per year, which is £2,750.
So you’ll pay £229.17 per month in addition to your monthly mortgage repayments.
At the end of your mortgage term, you’ll own half of the property. However, you could choose to buy extra shares over time to work your way up to full ownership.
How much deposit do I need for a shared ownership mortgage?
You’ll need at least a 5% deposit for your share of the property. However, as with all mortgage types, offering a bigger deposit can boost your loan-to-value ratio and therefore give you access to more competitive interest rates.
As you only need to put down a deposit for the share you want to purchase, the deposit amount can be much lower and therefore much more accessible.
For example, on a £300,000 property, you’d need:
£15,000 for a 5% deposit with a traditional mortgage
£3,750 for a 5% deposit on a 25% share
£7,500 for a 5% deposit on a 50% share
£11,250 for a 5% deposit on a 75% share
Our online deposit savings calculator can help you work out how much deposit you’ll need for a share of the property you want to buy.
Get your shared ownership Mortgage in Principle
Ready to see what you could borrow? A Mortgage in Principle (MIP) gives you a clear idea of your home buying budget.
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Soft search - no impact on your credit score
Check your eligibility & affordability across a wide range of lenders
Am I eligible for shared ownership?
You’ll need to meet certain criteria to apply for shared ownership:
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You must be at least 18 years old
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Your annual household income must be less than £80,000 (or £90,000 in London)
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You must be a first-time buyer, used to own a home but can’t afford to buy one now, be an existing shared owner wanting to move, be forming a new household or already own a home but can’t afford to move to a new one which will meet your needs
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As with other mortgages, you should have a good credit history with no significant debts, and you should not be in mortgage or rent arrears
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You must have a deposit to cover at least 5-10% of the share you are buying
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Some housing providers may have additional local eligibility requirements, such as insisting you have a connection to the area
Have questions about your eligibility for a shared ownership mortgage? Get in touch with us. We’ll review your mortgage options and recommend ones that best suit your circumstances.
“Being eligible for the shared ownership scheme and being eligible for a mortgage are two different things. Lenders will want to make sure you can comfortably afford both your mortgage repayments and rent, so you’ll need to pass their eligibility, affordability and credit checks too. A broker can help to support you throughout the process.”
John Fraser-Tucker, Head of Mortgages
Shared ownership pros and cons
As with any financial decision, there are no right or wrong answers - just the right option for you. Here are some of the pros and cons of shared ownership mortgages:
Advantages of shared ownership:
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Get on the property ladder sooner. You may not have to wait as long to save up for a deposit, or for your affordability to improve, as you’ll be essentially buying a smaller share of a property.
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Buy a share of your dream home. You’re not limited to buying a home worth only a multiple of your income (usually around 4.5x). This could help you access a much wider range of properties, perhaps one in your dream location or a home with extra room or green space.
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Put down a smaller deposit. As your deposit is based on the share you buy, not the full property value, you won’t need to put down as much cash upfront.
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Lower monthly payments. The combined mortgage and rent can even sometimes be cheaper than private renting.
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You’ll own your own home. Enjoy the stability and flexibility of home ownership, including building up equity over time. After all, if property prices increase, the value of your share increases too.
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Buy more when you can. You can gradually buy a larger share of your property until you own 100%.
Disadvantages of shared ownership:
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Your buying options may be limited. You’ll only be able to choose between specific shared ownership properties, which can limit your choices.
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Extra costs to consider. You’ll be responsible for 100% of the maintenance costs. And, as most shared ownership properties are leasehold, you may have to pay ground rent and service charges in addition to rent on the portion of the property you don’t own.
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Staircasing can be pricey. The extra shares will be bought at the current market price, which may be more expensive than they would have been when you bought your original shares. Buying more shares often involves paying administration fees, valuation fees and legal costs, too.
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It can be tough to sell. The housing association often has the right to find a buyer first before you can put it on the open market.
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You may face certain restrictions. There may be rules about making major home improvements, structural changes or subletting. It’s worth checking the terms of the lease before you buy so you’re aware of any restrictions from the get-go.
Ready to talk about your shared ownership mortgage options?
Tell us a bit about you and, if you’re eligible, we’ll book you in to speak with one of our Mortgage Experts to review your mortgage options.
Shared ownership mortgage FAQs
Many different lenders accept applications from those buying a shared ownership property, including high-street banks to specialist providers. But not all do. It’s also worth keeping in mind that different lenders will have different criteria for applicants so it’s important to apply with a lender that suits you best.
Working with a broker can help you cut through the noise. We’ll check your eligibility and affordability to make sure you only apply with a lender most likely to accept you and your circumstances.
Yes, you’ll need to pay Stamp Duty on a shared ownership property, but you have a choice. You can either pay Stamp Duty on the full value of the property upfront, or you can pay it only on the share you are buying now, then pay the rest later when you staircase above 80%.
It’s worth noting that most first-time buyers will be exempt from Stamp Duty on the first £300,000 for any home that costs up to £500,000.
It can be more challenging, but it is not always impossible. Some lenders are more flexible than others and you may find that, as you’re getting a mortgage for a smaller amount, it’s more accessible to get a shared ownership property than buying one outright. It's best to speak to a broker who can advise on your specific situation.
Yes. You may hear shared ownership referred to in a few different ways, including part-ownership and part-buy, part-rent.
It is, however, very different to a part and part mortgage, which combines the features of repayment and interest-only mortgage types.
The scheme typically covers new build properties, but you can also buy existing shared ownership homes from their current owners (this is known as a 'resale'). In nearly all cases, these properties are sold on a leasehold basis.
If you have a long-term disability and cannot find an existing shared ownership home that meets your specific needs, you may be eligible to purchase a suitable home on the open market on a shared ownership basis.