During our recent webinar, a lot of the questions we received focused on eligibility, income limits, deposits and whether Shared Ownership really is affordable.
This article brings those answers together in one place, explaining how Shared Ownership affordability assessments work and what you can expect when applying.
What Is Shared Ownership?
Shared Ownership is a government-backed initiative that makes home ownership more achievable for people who may not be able to afford a full market purchase.
How Shared Ownership works
Instead of purchasing 100% of a property as you would when buying traditionally, you buy a share (usually between 25% and 75%). You take out a mortgage on the share you own and pay rent on the remaining portion, which is owned by a housing association such as Peabody.
Over time, you can also buy more shares in the home through a process called Staircasing. It's possible to eventually own 100%, while others are happy staying at a lower share if it suits their budget.
You can explore our homeowner stories to see how others have turned their dream of owning a home into reality through Shared Ownership.
Shared Ownership affordability criteria
Before you’re offered a Shared Ownership home, your finances will be assessed to make sure the property is genuinely affordable for you.
What are the income thresholds for Shared Ownership
Shared Ownership is aimed at people who can’t afford to buy a suitable home on the open market. Therefore in England the household income cap is £80,000 per year, or £90,000 in London.
That said, affordability isn’t just about your salary. Providers will also look at your overall financial situation including existing commitments and outgoings, to check that the monthly costs will be manageable.
What are the deposit requirements for Shared Ownership
One of the big reasons Shared Ownership appeals to first-time buyers is the lower deposit requirement.
The deposit that you need to pay is based on the share you’re buying, not the full market value of the property.
For example, if the home is worth £300,000 and you’re buying a 25% share (£75,000), a 5% deposit would be just £3,750.
This makes Shared Ownership far more accessible for buyers who have a hard time saving up for a large deposit.
Shared Ownership Affordability: can you afford it?
Costs involved in Shared Ownership
Shared Ownership monthly costs include:
- Mortgage repayments on the share you own
- Rent on the remaining share (set at a discounted rate)
- Service charges, which cover maintenance of communal areas
- Ground rent, (not always applicable)
These costs are reviewed as part of the Shared Ownership affordability assessment to ensure they fit comfortably within your budget.
Examples of Shared Ownership costs
Our developments like St Olave’s in Canada Water and West Ham Village in Newham show how buyers can secure a share of a modern apartment in great central locations without the full upfront expense of purchasing outright.
All this while still benefiting from excellent transport links, thoughtfully designed homes, and the option to Staircase.
Example financials
St Olave’s, Canada Water
St Olave’s in Canada Water offers modern 1 and 2-bedroom apartments in a prime Zone 2 location, combining stylish design with excellent transport links and access to green space.
Here are the costs for a 1-bed apartment:
- 25% share price: £115,000 of £460,000
- Deposit from: £11,500
- Monthly cost from: £1,613
- Monthly mortgage: £570
- Monthly rent: £804
- Monthly service charge: £239
West Ham Village, Newham
West Ham Village at TwelveTrees Park delivers spacious, high-spec apartments in a vibrant East London community, moments from West Ham Station and surrounded by acres of landscaped open space.
Here are the costs for a 1-bed apartment:
- 25% share price: £108,750 of £435,000
- Deposit from: £9,875
- Monthly cost from: £1,372
- Monthly mortgage: £531
- Monthly rent: £544
- Monthly service charge: £298
How to calculate your monthly affordability
When assessing affordability, housing providers usually expect your housing costs to fall within a set percentage of your net monthly income. This helps ensure you’re not overstretched and still have enough left for everyday living costs.
Using our Shared Ownership affordability calculator can give you a good idea of whether you’re likely to pass an assessment.
Our tool provides a quick estimate of what you could afford in a Shared Ownership home, showing potential monthly payments and deposit amounts to give an idea of the share percentage you might be able to purchase.
What lenders look for when applying for Shared Ownership
Mortgage lenders assess Shared Ownership applications in much the same way as standard mortgages. They’ll look at:
- Your income and employment stability
- Credit history
- Existing debts and financial commitments
- How affordable the monthly payments are
There are two main types of mortgages: fixed-rate, where interest stays the same for a set period, and variable rate, where interest can rise or fall with the Bank of England base rate or lender’s standard variable rate.
Most major banks and specialist lenders now offer Shared Ownership mortgages, and an Independent Mortgage Advisor (IMA) can help determine which lender and mortgage deal best suit your financial situation.
Frequently asked questions about Shared Ownership affordability
There isn’t a fixed minimum income for Shared Ownership. Instead, it depends on the property price, the share you’re buying, and your overall financial situation. The key test is whether the monthly costs are affordable for you after other expenses.
It’s possible, but it can be more challenging. Some lenders are willing to consider applicants with less-than-perfect credit, particularly if the issues are historic and you can demonstrate improved financial behaviour. Serious or recent credit problems may limit your options.
No. One of the main benefits of Shared Ownership is that deposits are typically much lower than buying outright. Many buyers get started with deposits of 5 to 10% of their share, making it a more realistic option for those struggling to save.
