Shared ownership guide
Shared ownership has become very popular for many people in the UK who would like to own their own home but perhaps can't afford to buy a property in full.
Here at Saffron we offer a range of Shared ownership mortgages with something for everyone.
Shared ownership enables you to take your first step into home ownership by buying a percentage share of a property.
Contact us
- Call our Saffron Direct team free on: 0800 072 1100
- Contact us online
- or, pop in and see us:
- Visit your branch
- What is Shared ownership?
- Am I eligible for a shared ownership scheme?
- Types of schemes available
- Are there any restrictions on the type of property I can buy?
- How much rent will I have to pay?
- Can I afford it?
If you still have questions about shared ownership, please contact us
What is Shared ownership?
Shared ownership schemes are used to purchase a house when you may not normally be able to afford one. Usually they are on a part buy part rent basis and are popular with first-time buyers as they only need to find a small deposit and the mortgage amount is typically smaller.
When you buy a shared ownership property you are only buying a percentage stake in the property. This can vary from 25 to 50 per cent. Typically shared ownership schemes are run with a housing association. You will need to get a mortgage for your purchased share and pay rent for the other share. In most cases as your circumstances or finances change you can then buy further shares until you own the property.
Shared ownership schemes vary from lender to lender, with some lenders, such as Saffron lending up to 100% loan to value on the purchase share.
Top of the pageAm I eligible for a shared ownership scheme?
There are many different ways you can get help buying a home. Each individual scheme will have its own criteria so it's well worth checking the details of each scheme with the landlord or relevant housing association.
Keep up to date with the latest news from all the councils- You may be eligible if you are one of the following:
- a council tenant
- a housing association tenant
- a key worker (e.g. a teacher, police officer, nurse)
- identified by the Regional Housing Board as a first time buyer who can't afford to buy a property
As you'd expect demand for these kinds of schemes is extremely high and some councils and housing associations may limit their scheme.
Each scheme has its own priority list. The best advice is to contact your local authority and find out if you qualify for any of their housing initiatives. It is best to contact your local authority directly to find out qualifications in your area. But typically several requirements are in place:
- You have been living in the borough for over 2 years.
- Generally, your minimum income should be at least £17,000 a year and your maximum household income is £42,000 for an individual, £50,000 for a couple.
- A European Union or British passport is required, or permanent resident status if an overseas passport holder.
Types of schemes available
There are several options available to those looking at shared ownership. Some schemes are only available to key workers such as Police officers, nurses, etc, or to council and housing association tenants.
- Conventional Shared Ownership
- Under this more traditional scheme, you buy a partial share in the home (usually around 25-30%). The remaining share of the home is owned by a housing association. The share you are buying is bought using a mortgage, visit our current range of shared ownership mortgages, which aim to cover everyone's needs, you rent the remaining share from the housing association. Later, when you can afford it, you can increase your share until you own the whole property. The purchase of further shares is based on the current market value of the property, whether it has gone up or down. This is sometimes called ‘staircasing'.
- Homebuy
- This national scheme allows home buyers to get a 25% loan from the local housing association to fund the purchase of a home. If you qualify, you can apply for the loan from your local housing authority, and fund the remaining 75% of the property price with a mortgage. You pay back the 25% when you sell. This is mainly open to council or housing association tenants. Enables people to buy a share of a newly built property and pay a rent on the remainder (this includes the First-Time Buyers Initiative which uses public sector land).
- Key worked Homebuy
- Similar idea to the Homebuy scheme however this scheme is only open to key workers in London. This allows key workers to find a property in London on the open market (with 90 minutes travelling time to work and up a maximum value of currently £210,000) and get a loan of up to £50,000 towards the cost.
- Do-It-Yourself Shared Ownership
- This option is offered by a few local authorities, again its worth checking with your local authority to see if they offer this scheme. This allows you to select any property on the open market and then buy it on shared ownership terms with the local housing association. As with a conventional shared ownership scheme you pay rent on the share you don't own.
Are there any restrictions on the type of property I can buy?
Not usually. Depending on the type of scheme you are looking to join, where the property is and who the local housing association is there may be property restrictions. It's worth speaking to your local housing association before house hunting! This may save you a lot of time and heart ache.
Top of the pageHow much rent will I have to pay?
This depends on the amount of share you are purchasing, the type of property, where the property is located and who the housing association are. Before agreeing to buy a shared ownership property, make sure you understand exactly how much you will be paying each month in rent.
Top of the pageCan I afford it?
You should know if you are eligible and who offers shared ownership schemes, but how much is it all going to cost?
The bottom line is that you will be paying two amounts each month, one for your mortgage and one for the rent on the share you don't own. Make sure you have calculated both amounts into your budget.
When it comes to the mortgage, a mortgage consultant will help you understand whether you can afford to buy a shared ownership property.
The terms for shared ownership mortgages differ from a mortgage that you would take out to buy a home on your own. Most lenders will require a minimum share to purchase, at Saffron it is 40%. Some lenders will require a deposit on the remaining share that you wish to purchase, however here at Saffron we offer up to 100% Loan to value on the share you are purchasing. Visit our current range of shared ownership mortgages, which aim to cover everyone's needs.
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