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What Is A Shared Ownership Mortgage  & How Does It Work?

What Is A Shared Ownership Mortgage & How Does It Work?

For many, owning a home is a dream that feels impossible. With the average UK home costing £285,000 – and an ex-council house in London recently selling for a cool £3.5million – becoming a member of Generation Rent feels inevitable.

But, saving up for a huge deposit and buying your own home isn’t the only way to get on the property ladder.

Shared ownership mortgage schemes allow you to buy a portion of your property, while still paying rent to a landlord, local council or housing association. In some cases, this means saving up for a deposit of just 5% of your share of the home.

What is a shared ownership mortgage?
Shared ownership gives first-time and other buyers the opportunity to purchase a share in a leasehold property. They take out a mortgage on the share they buy and pay rent on the balance, usually to a housing association.

Why choose a shared ownership house?
It’s the most affordable way to get or stay on the housing ladder if you don’t earn enough or have sufficient savings to buy on the open market. Both the mortgage and deposit are much smaller: the deposit’s typically five or 10% of the share you’re buying and the rent’s subsidized. Monthly mortgage and rent combined work out cheaper than a mortgage alone would.

Who’s eligible for a shared ownership mortgage?
First-time buyers, existing owners who are selling and former homeowners who are unable to cover the cost of a property with a deposit and mortgage only. You must be 18 or above, have a good credit history and annual household income can’t exceed £90,000 in London or £80,000 everywhere else in England.

What size share can I buy?
At most developments the minimum initial share is 25% of the full market price – though 10 per cent shares are gradually being introduced – and the maximum is 75%. You must buy the biggest share you can afford, which is calculated after a financial assessment. There’s no restriction on the number of bedrooms.

What types of shared ownership houses are on offer?
Both dedicated new-build and resale properties fall within the scheme. New-builds are often sold off-plan, so you won’t get to see your exact home before committing to buy, though the show home should have the same spec. Resales are sold by existing shared owners and you’ll be required to buy an equal or larger share than the person you are buying from.

How do I apply for a shared ownership mortgage?
Register with to search for shared ownership homes nationwide and with housing associations covering the areas you want to live in. Some prioritize applicants currently living or working within the borough. Once you’ve found somewhere you like and have proved eligibility, the housing association will guide you through the process.

Can shared owners buy more shares?
Definitely! This is called staircasing and extra shares are normally purchased in increments of 10%, and financed through savings or remortgaging. The cost of the new shares is based on the market value of the property at the time of staircasing, and you’re liable for legal and valuation fees. Reaching 100% means you own your home outright, and won’t pay any rent.

What happens when I want to sell?
Unless you’ve staircased to 100% ownership, your landlord – the housing association – will market your home first, for up to 12 weeks. You’ll have to get it valued so that the price of your share can be calculated. If no buyer’s found during this period, you’re free to sell it yourself through an estate agent.

What’s changing about shared ownership?
Back in 2021, the government launched a new shared ownership model designed to open up the scheme to more people, and cut maintenance and staircasing fees. It dropped the minimum initial share size to 10% (from 25%) and lowered the minimum tranche you can purchase when staircasing from 10 to 5%.

There’s also a new form of staircasing whereby you can purchase an extra 1% of your home each year with much-reduced fees, and shared owners now have more control when selling.

Housing providers are required to contribute towards the cost of essential repairs and maintenance – previously shared owners’ responsibility – for 10 years. The majority of new shared ownership homes are still old model, but check when buying.