One of the main questions asked about shared ownership is; Is shared ownership only for first time buyers? The answer is no, not strictly. It is a great option for first time buyers, but there are many reasons why other buyers may want to choose shared ownership:
They want to downsize – Maybe a family has become smaller due to children growing up and moving out. This is a great option for those wanting to downsize as they will not need a huge deposit and may not want to be paying off a mortgage.
There has been a relationship or family breakdown – Shared ownership again would be beneficial as it would allow someone to be able to move out even if they have not got a lot of money saved.
There is a home in a desirable area – There is the possibility that you could live in a desirable area for the fraction of the cost.
Eligibility for Shared Ownership
• You could buy a home through Help to Buy: shared ownership in England if:
• You have a household income of less than £80,000 (outside London) or £90,000 (inside London) and
• You are a first-time buyer, you used to own a home but can’t afford to buy one now or own an existing shared ownership property but are looking to move.
Shared ownership is mainly targeted and marketed at first time buyers, but they are not the only group who can buy shared ownership properties.
What are the costs of Shared Ownership?
Shared ownership costs are usually lower than other housing tenures, so it is great for first time buyers. Shared ownership can be seen as an ideal way for first time buyers to get on the property ladder for many reasons.
Many first time buyers see shared ownership as a great option to start owning their own home. Even getting a deposit together is easier as the shared ownership mortgage is only for the share of the property you are buying. The rest, is rent which is paid to the housing association that owns the development.
You only need a 10% deposit of the share you are buying. For example if a 40% share of a property is £40,000, you would only need a £4,000 deposit. This makes shared ownership very affordable, especially for first time buyers.
You will also need some cash for shared ownership solicitor’s fees and moving costs but still we hope that gives you an idea of how accessible owning your home can be.
Shared Ownership mortgages
If you buy a shared ownership property, you’ll need a shared ownership mortgage for the share of the property you buy. You’ll typically need a 5% deposit, rather than 10%. Not all lenders offer shared ownership mortgages so you will need to do your research.
Why should first time buyers choose Shared Ownership?
Shared ownership allows people to get a foot on the property ladder easier. You can save less for a deposit and still own your percentage of your house. If you have found a house you love but wouldn’t be able to afford it on the open market, it can give you the chance to ‘staircase’ up to 100%. This would be beneficial to those progressing in their career but are not quite at the level they would want.
By owning a share in a property, this gives you the opportunity to live in a house for a lot lower cost and could potentially be your forever home. Whatever you decide, it is best to consider both the pros and cons of shared ownership before you commit.
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