In follow up to last week’s article about the difficulties first time buyers face getting on to the property ladder, we will be discussing the shared ownership option in this article.

What is shared ownership and how does it work?
 
Shared ownership assists buyers who cannot afford to buy a property outright. Through the scheme you buy a share of the property and pay rent on the remaining share. You are then able to buy further shares in the property eventually owning the property outright. This method is known as stair casing.

Which people are eligible?

Shared ownership schemes are available to any buyer looking to get on to the property ladder subject to funding availability from the local borough. A high number of affordable homes within these schemes are available in new developments across the country. However, there are drawbacks to this. For example, when these new developments are released to the public, priority is given to residents already living in the borough of the development. Priority is also given to people who will be ending their tenancy at their local council or housing associations when purchasing and everybody else takes lower priority.

Who will lend?

In previous years lenders were not forthcoming in lending to shared ownership schemes. However, with prices now being out of reach of most first time buyers as well as initiatives put in place by the government, lenders now see this as a sector that is growing rapidly and want a piece of the action. This can only be good news for you.

At the moment the largest high street lenders such as Abbey, Alliance and Leicester, Halifax, Nationwide and Woolwich will lend on shared ownership schemes.  These banks will allow the buyer to borrow on their normal rates and will not penalise you for buying through a scheme. Most lenders however will expect you to raise some sort of deposit of the share you are buying. However, there are lenders that will lend you 100% of the purchase price of your share.

 What are the next steps?

If you are interested in finding out more about developments that are available then you can go to www.housingoptions.co.uk. This website lists developments that are currently available as well as providing more information about what I have discussed above. If you would like to know more about the mortgages available then please contact me at the address below.

Over the coming weeks I will be writing about the buy to let market. If you would like to ask any questions about building your own portfolio as well as some of the pitfalls to avoid then please email me at the following address: propertymart@themortgagetimes.com

James Smith is a marketing executive for Mortgage Minds.
Mortgage Minds is an independent mortgage proposition, a division of the Mortgage Times Group Limited. The Mortgage Times Group Limited are authorised and Regulated by the Financial Services Authority (303007)

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