Are you interested in owning your own home but struggling to afford it? Shared Ownership could be here to save the day (and your finances). Using this handy part-buy, part-rent scheme, you can purchase a portion of your home and rent out the part still owned by your housing provider.
If you’re a Shared Ownership newbie, buying a property using the scheme might seem tricky. Here are some useful tips to make sure you make the most informed decision:
Shared Ownership advice:
- Research the development
- Do the calculations
- Get pre-approved for a Shared Ownership mortgage
- Consider your location
- Ask about shared spaces
- Know your options for buying more shares
- Get advice from other Shared Ownership homeowners
Research the development
Shared Ownership might sound like a perfect idea on paper, but make sure you know exactly what it involves!
Take the time to understand how Shared Ownership works, what the costs are, and who the best housing providers in your area are. Doing your research will help you make a confident decision, and find a home that meets all of your needs.
Do the calculations
Unless you’re a gifted mathematician, it can be challenging to wrap your head around the costs involved with Shared Ownership.
Make sure you understand how to pay for the scheme, including your initial deposit, mortgage repayments and the subsidised rent you’ll pay on the side. And make sure to factor in additional costs like valuation fees, legal fees, and potentially even stamp duty!
A good place to start is with an affordability calculator, which can help you work out what size share you may be able to afford and what your monthly costs could look like.
For example, a one-bedroom home at Dagenham Green has a full market value of £282,500, but you could buy a 30% share for £84,750.
Based on the example figures, that would mean a deposit of £8,475, a monthly mortgage payment of £413, a monthly rent of £453 and a monthly service charge of £179, bringing the total monthly cost to £1,045.
Get pre-approved for a Shared Ownership mortgage
Just like with buying a traditional home, you’ll need to get pre-approved for a mortgage to buy a Shared Ownership property. Not all lenders offer Shared Ownership mortgages, so it's essential to find a lender that does and get pre-approved as soon as possible.
With a pre-approved mortgage, you'll have a better idea of how much you can borrow, and your house-hunting can truly begin.
Getting pre-approved early can also make your property search much more straightforward.
It gives you a clearer idea of what you may be able to borrow so you can narrow down your options.
Consider your location
One of the best parts about Shared Ownership is that there is no limit to what area you choose to live in! Shared Ownership homes are available all over London and can be found in some of the best parts of the capital city.
So think about what kind of area you want to live in, whether it's a quiet suburban neighbourhood or something right at the heart of the action in Central London.
That means considering things like:
- commute times
- transport links
- nearby shops and supermarkets
- schools or childcare if relevant
- green space
- local amenities
Ask about shared spaces
Shared Ownership offers you the chance to live a luxurious life without paying luxury prices.
Case in point: many Shared Ownership homes come with plush shared spaces like gardens and balconies.
With this in mind, find out what shared spaces are available and how they can enhance your day-to-day life.
Shared spaces might not be your first priority when buying a home, but it’s always worth finding out what you’re getting for your money.
Know your options for buying more shares
The excitement of buying your first home doesn’t end once you’ve bought a share of your Shared Ownership home.
Once you’ve lived at your Shared Ownership property for a set period of time (usually 1-2 years), you’ll soon get the option to purchase more shares through ‘Staircasing’.
If you dream of owning all of your home one day, staircasing is a quick and affordable way to do it!
Understand the terms of your lease
Before you commit to a Shared Ownership home, make sure you read the lease carefully.
This will help you understand any restrictions, ongoing costs and responsibilities that come with the property.
For example, your lease may include rules around subletting, making alterations to your home, or other important conditions you’ll need to be aware of as a leaseholder.
Get advice from other Shared Ownership homeowners
Want to find out what Shared Ownership is really like? Why not ask someone who has first-hand experience living in a Shared Ownership property? Whether you ask a friend of a friend or reach out to a homeowner who used the scheme, this could be the best way to get an unbiased view of the Shared Ownership experience.
If you want to take advantage of Shared Ownership, Peabody could help you find your dream home in style. With a selection of high-quality homes available through Shared Ownership, there’s no better way to find an affordable home in an area you love.
Frequently asked questions about buying through Shared Ownership
The deposit you need for Shared Ownership is usually based on the share you are buying rather than the full market value of the home, which can make it more affordable than buying outright.
The exact amount will depend on the property price, the size of the share you are purchasing and your mortgage lender’s requirements.
As an example, if you were buying a 30% share worth £84,750, your deposit might be around £8,475, depending on the mortgage product.
When budgeting for Shared Ownership, you’ll need to think about more than just your deposit.
You’ll need to pay your monthly mortgage, rent on the share you do not own, and a service charge, as well as upfront costs such as legal fees, valuation fees and potentially stamp duty.
Looking at the full picture from the start can help you understand what is manageable each month and avoid unexpected costs later on.
The Shared Ownership buying process can vary, but it often takes around 8 to 12 weeks from reserving a home to completion.
The timeline can depend on things like how quickly your mortgage is approved, how long your solicitor takes, and whether all the paperwork is returned on time.
