Are Shared Ownership Mortgages Easier To Get?
If you’re at your wit’s end when it comes to securing a mortgage, you may be looking at alternative options. Shared Ownership Mortgages come with smaller deposits and more manageable repayments. In this guide, we’re looking at whether this type of mortgage is not just more affordable, but also easier to get.
This type of mortgage allows you to part-buy a property. The rest of the value you pay rent for to the relevant body that owns the remaining share. This can be an attractive prospect for those struggling to afford a home with a traditional residential mortgage. It’s not for everyone though.
Whether you’re in employment or receiving eligible universal credit/benefits, you can apply for a shared ownership scheme to fund home ownership.
Lower and upper affordability limit
Criteria outlined by the House and Communities Agency (HCA) states that a minimum of 25% of your net wage and 2.5x your gross income should be used towards home ownership.
There is also an upper limit. This equates to 45% of your net wage and 4.5x of your gross salary to ensure long-term sustainability.
It’s possible to get this mortgage with bad credit. Your options will be more limited, but there may be lenders who are able to work with your circumstances.
Types of property you can buy
There are limitations on the types of property you can buy. These include:
- A new-build home
- An existing home through a shared ownership resale scheme
- A home that meets your specific needs, if you have a long-term disability – such as a ground floor flat
Shared Ownership homes are currently provided through the Affordable Homes Programme (AHP) which will run until 2026. There are different rules for Wales, Scotland and Northern Ireland compared with England, so you should speak to a local mortgage broker that knows how eligibility criteria and application processes differ.
In summary
Just like any other type of mortgage, eligibility criteria apply. Shared Ownership schemes are designed to be more affordable but they’re not necessarily easier to get. You have more limitations on the types of property you can buy and there is a recommended minimum affordability threshold.
As always, it’s recommended that you talk to an independent mortgage advisor to see whether this type of mortgage is right for you. They can also talk you through the terms and conditions and help you find the right mortgage.
Shared ownership can help make buying a property more affordable. Our advisors can talk you through the details. Contact our Whole of Market mortgage experts in Peterborough today to book your free initial consultation.
