By admin 2020-10-26 13:21:28

Shared Ownership Mortgage, Part-Buy & Part-Rent


Shared ownership is a scheme also known as "part-buy and part-rent" which allows you to buy a share of a property and rent-out the remaining share. It was created for people who want to start investing in the property market but have little deposits to put upfront as down-payment.

You buy a property stake between 25% and 75% from the available properties in the housing association (a not-for-profit organisation that supplies housing). You can then pay rent of up to 3% on the remaining share.

The process is called 'staircasing', it applies once you have received your share of the property. An agreement must be arranged by the housing associates if you want to buy more shares.


Process of applying for a shared ownership scheme.


Firstly, finding a local “Help to Buy” agent who will help you throughout the process. You can find one from the government's “Help to Buy” website.

Ask yourself relevant questions such as
  • What is your total income?
  • Do you have existing savings?
  • Where do you want to live?
  • Are there outstanding debts?
  • Do you have a good credit history?

Your application will or should be assessed within around four days. Once your application has been approved, you can begin to look for your shared ownership property with the assistance of your Help to Buy agent.

You can start booking properties to views with the relevant housing association. Once you've found a shared ownership property you want to live in, you'll need to put down a reservation fee. It's typically £200 but could vary.

Although you would have already shared some financial details when applying for the scheme, you may still need to do a full economic assessment with the housing association. An independent financial adviser will carry this out.

Mandatory documents they will ask to see:
  • Three months of payslips
  • Three months of bank statements
  • Proof of ID
  • Proof of savings
  • Information about existing debts and other credit arrangements
  • Information about any benefits you receive.
  • A credit check may be conducted. This will determine what kind of share you can afford, and what rent you will need to pay.

Pros and Cons:


Shared ownership property can be a great way of becoming a beginner property investor, but it's not the ideal solution for everyone. Here are some of the pros and cons.

Pros: Advantages of shared ownership

  • There are times where it can be cheaper than renting.
  • be quicker than buying a home.
  • Additional shares can be bought as time goes by.
  • You can either save or pay more off from your mortgage.
  • You can sell a shared ownership property at any time and will benefit from any increase in value from the time it is bought.

Cons: Disadvantages of shared ownership

  • You'll have to buy where the shared ownership properties are located, which may not be your preferred location
  • It can be difficult to staircase (build up the share you own) if the value of the property increases, as the shares will become more expensive.
  • You'll usually have to pay a service charge - although this is generally true with all leasehold properties, whether they are shared ownership or not.
  • It can be tricky to get a shared ownership mortgage.

As much as getting shared ownership can be difficult, our mortgage consultants can help you find one. Visit SmartMortgagesUK for more info.

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