What is Shared Ownership?
Shared Ownership is a scheme whereby you can buy a share of your home (between 25% and 75%) and pay rent, to the Housing Association on the remaining share. You have the option of buying a bigger share in the property at a later date.
All shared ownership properties in England are offered on a leasehold only basis. Most of the properties available are newly built but some are properties being re-sold by housing associations.
Who can apply?
The scheme is aimed at people who cannot afford to buy a home outright.
You can buy a home through shared ownership if your household earns £80,000 or less (£90,000 or less if you live in London). The following criteria applies:
- You’re a first time buyer
- You rent a council or housing association property
- You used to own a home, but can’t afford to buy one now
Military personnel will be given priority over other applicants.
If you’re aged 55 or over you can buy up to 75% of your home through the Older People’s Shared Ownership (OPSO) scheme. Once you own 75% you won’t have to pay rent on the rest.
If other Help to Buy scheme properties don’t meet your needs (e.g you need a ground floor property), you can apply for a scheme called Home Ownership for People with a Long-Term Disability (HOLD). You can buy up to 25% of your home with this scheme. If you are disabled you can also apply for the general ownership scheme and own up to 75% of your home.
Can I buy more of the property?
Yes, by purchasing more shares in the property, known as ‘staircasing’. The housing association will get your property valued and let you know the cost of your new share. You will have to pay the valuer’s fee.
The cost of your new share will depend on how much your property is worth when you want to buy the share. A share will cost more than your first share if property prices in your area have gone up, or less than your first share if property prices in your area have gone down.
Can I sell my property?
If you own 100% of your property, you can sell it yourself. Otherwise, if you own a share of your property, the housing association has the right to buy it first. This is called ‘first refusal’.
The housing association also has the right to find a buyer for your property.
What is the application process?
To see whether the scheme is available in your area, and if you are eligible to apply, speak to your housing association or housing team in your local council.
Check your finances to make sure you can afford all home ownership costs such as mortgage fees, stamp duty, surveys, repairs, insurance, maintenance, moving costs, monthly rent payment, service charge (to maintain common areas and grounds) and ground rent. Although you only own a share of the property with Shared Ownership, you are still responsible for all of the maintenance costs. You will still have to apply for a mortgage and undergo affordability checks, and supply a deposit of a minimum of 5% of the share of the property you are buying. Not all lenders give mortgages for Shared Ownership schemes.
At Hanley Building Society, we offer a range of mortgage products to suit your personal mortgage requirements. Shared Ownership mortgages are just one product that we offer.
About Hanley’s Shared Ownership Mortgage
Rate: 3.24% initial pay rate for the term of the mortgage, which represents a 1.95% discount off Standard Variable Rate (currently 5.19%)
Maximum Loan to Value (LTV): 95% of your share.
Fees: There is no application fee.
Minimum Interest Rate: The interest rate on this product will not drop below 2.99%.
Loan Size: Minimum Loan £30,000, Maximum Loan £500,000.
Early Repayment Charges: If this mortgage is repaid in full or in part during the first 2 years an early repayment charge will apply. This will be 2% of the balance repaid during this period. Example – The maximum early repayment charge you could pay is £1,105 based on £55,250.
Overpayments: Overpayments of up to 10% of the mortgage balance are permitted each Society year during the first 2 years and may be made monthly standing order. Any additional overpayments above 10% during this period will attract a penalty calculated on the excess amount.
Higher Lending Charge: Not applicable.
Representative Example: A mortgage of £55,250 payable over 25 years on a discounted variable rate of 3.24% for 25 years would require 300 monthly payments of £268.95.
The total amount payable would be £81,061.97 made up of the loan amount plus interest (£25,431.97), a Valuation fee of £250, a funds transfer fee of £35 and a mortgage exit fee of £95.
The overall cost for comparison is 3.4% APRC representative.
At The Hanley Economic Building Society, we offer free mortgage advice. Call us on 01782 255000 to speak to one of our advisers or visit us at one of our branches for more information on how we can help you.