Are you finding is difficult to get on the property ladder? It could be that your wages are not high enough to enable you to get a mortgage large enough to buy a property, or like many people, the high costs of renting means that you just don’t have any spare cash to put away for a large deposit required. There is an answer to this dilemma! Shared ownership mortgages.
This is where you own part of the house and rent the other part (usually from a housing association). Typically shared ownership deals can start at 25%, 50% or 75% of the property value. As part of the shared ownership deal, you may have the option to buy further shares in the property as time goes on if it becomes affordable.
NOTE: There is criteria to qualify for a shared ownership property; however they are no longer restricted to “key workers” as previous schemes where.
To find out more please contact Ascot Mortgages, we are whole of market mortgage brokers who are experts in arranging shared ownership mortgages.
Why people choose to buy using shared ownership
Given the recent economic difficulties, and as mortgages have become more difficult to obtain, the housing market has slowed down. As a result of this developers have found that their new houses have been more difficult to sell and so the opportunity to buy through shared ownership has become increasingly popular. Shared ownership is where you buy a percentage of the home, so for instance twenty five per cent and the housing association, who has bought the home from the developer, owns the remaining seventy five per cent.
These properties are usually on a leasehold of 99 years. Chunks of the property are usually sold in twenty five per cent increments, although ‘stair casing’ allows you to buy outside of these increments if you require. Therefore you live in the property and pay a mortgage on the twenty five per cent, and rent on the seventy five per cent that the housing association owns. There are different types of schemes available, some are for social housing tenants and others can be for key workers, such as nurses and teachers and is generally available to you if your household income is less than £60,000 a year, although this can be higher in London. You can sell at any time but usually the housing association can buy the share that you have bought back, or find a buyer for it.
You would still need a deposit on this option, usually about ten per cent of the amount of the property that you are mortgaging, and of course more is always welcome! Shared ownership is a great opportunity because it means that you typically need a lower deposit to start, but repay monthly as you would with a mortgage. For example, say you bought fifty percent of a house worth £100,000, you would only need a £5000 deposit, as opposed to the £10,000 that you would usually require, which makes property ownership much more feasible especially for first time buyers who have struggled to save for a deposit alongside paying inflated rental prices. You should be entitled to the same range of mortgage products as customers who are buying one hundred per cent of their home.
Despite the benefit of having a shared ownership property, this arrangement does have the potential to become complicated when you get to the stage of arranging a mortgage. Some lenders can be wary because of the shared ownership element and if you approach multiple lenders and are refused then you could find that your credit history could be tainted. For that reason we recommend that you use an experienced mortgage broker like Ascot Mortgages to arrange your mortgage, because we are market leaders who can place your mortgage application with the right lender, in this case one who is happy to arrange your mortgage on a shared ownership basis. The reason that we can do this is because we are market leaders whose experience and reputation means that we can use our knowledge to work with a range of lenders and find the best deal for you. This means that you do not need to spend time contacting different lenders to find out if they will accept a mortgage on a shared ownership property, and of course you do not need to go through multiple, potentially damaging, credit checks.
Here at Ascot Mortgages we offer an initial no-obligation consultation, free of charge, and so it is well worth speaking to us to see if we can help you arrange your shared mortgage saving you time, money and hassle!
The overall cost for comparison is 5.89% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
Ascot Mortgages are an Independent “Whole of Market” UK Mortgage Broker. We are dedicated to providing the very best financial advice and the highest standards in customer service.
Please contact Ascot today, and you will be very glad you did.