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Is Shared Ownership a good idea? 26 January 2018 Explore Shared Ownership

As we know, house prices are not getting any cheaper and it's a really difficult market for first time buyers. In September 2017 we know that the average house price in the UK for first-time buyers was around £190,000 - with the typical deposit around £31,000. This figure is a massive 118% of an average salary*. So looking into alternate ways to own a home, is also on the rise.

What does shared ownership mean?

A shared ownership mortgage simply means that, instead of getting 100% equity in a home, you take out a mortgage on a percentage of its valuation, usually between 25% and 75%. The proportion you don't own, you pay a subsidised rent on to a housing association. You can buy more shares in the home when you can afford it and the homes are usually new build developments or resales of existing shared ownership properties.

 

Is shared ownership right for me?

Some things to consider:

  • You need to save a deposit and all the normal costs associated with home purchase, such as stamp duty, surveyors fees and so on.
  • You'll pay a monthly rent payment on top of your mortgage payment (combined, this is still usually cheaper than full mortgage repayments)
  • You are responsible for service charges for flats within a block
  • Unlike with renting, you are responsible for items in your home that previously your landlord might fix, such as the boiler, the washing machine or the heating..
  • Shared ownership is always a leasehold purchase so you'd pay a flat ground rent fee.

How do you get a shared ownership mortgage?

You may be eligible for a shared ownership mortgage if you are a first-time buyer, or your household income is no more than £80,000 a year (£90,000 in London). 

Gecko build Shared Ownership properties and you can search for Shared Ownership schemes on Share To Buy . Here you can see what housing associations and developers have on offer. 

In most cases, as with Gecko, you will need a 5% minimum deposit. Not all lenders offer shared ownership mortgages, and if you find a lender, it’s always worth looking around to get the right one for you at the best value. You should always look at your credit report and income to be sure you can afford repayments. 

Help To Buy loan scheme

The Government has an loan scheme where they can lend you up to 20% of a new-build home (40% in London), needing only a 5% deposit, and no loan fees for the first five years.

What does ‘staircasing’ mean?

Staircasing just means you can steadily increase the percentage of the home you own as and when you want to or can afford to.

Can you move from one shared ownership property to another?

Yes, as long as you have sold your home by the time you complete your next purchase so you don’t own two at the same time. You still have to be eligible for shared ownership and meet the criteria you had to meet initially. 

Can you remortgage with shared ownership?

Yes, once your fixed rate term is up this is a possibility.

Selling shared ownership properties

In short, yes, but you can’t sell it on the open market until the housing association (in this case Gecko Homes) has had ‘first refusal’, which can mean Gecko may buy it back or advertise it for a certain period of time, usually eight weeks, among new shared ownership hopefuls. However with Gecko this process is made easy as we look to make the quickest sale possible for you. 

Gecko would get it valued, rather than an estate agent and if it isn’t sold this way, you can sell it however you chose. 

However, there’s no reason why you can’t make a profit, especially if the value of the home has risen in line with general property increases in the area over a reasonable period of time - for example: a 50% share of a £200,000-value purchase, sold at £300,000, would give you a £50,000 equity profit upon sale - which renting would never give you.

 

 

 

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