Shared Ownership Mortgages

How Does a Shared Ownership Mortgage Work?

Shared ownership lets you buy a share of a property, usually between 10% and 75%, and pay rent on the remaining share to a housing association. Because you only need a mortgage for the share you’re buying, both your deposit and your monthly mortgage are much smaller than buying outright. For example, on a £300,000 home, buying a 50% share means a mortgage based on £150,000 rather than the full price, with a deposit typically of 5% to 10% of your share’s value rather than the whole property.

You then pay subsidised rent on the share you don’t own, which is usually lower than open-market rent. WIS Mortgages helps you work out an affordable share size and matches you with lenders who actively offer shared ownership mortgages.

Who Is Eligible for Shared Ownership?

Shared ownership is a government scheme available across England, Scotland, Wales, and Northern Ireland, though the rules vary by nation. In England, you’ll generally need a household income below £80,000 a year, or below £90,000 in London, and you must be unable to afford a suitable home on the open market. It’s open to first-time buyers, those who used to own a home but can’t afford one now, and existing shared owners looking to move. You also can’t own another property at the same time. WIS Mortgages helps you confirm your eligibility and understand which shared ownership properties in your area you can apply for.

Staircasing: Buying a Bigger Share Over Time

One of the biggest advantages of shared ownership is the ability to increase your share of the property over time, known as staircasing. As your finances improve, you can buy additional shares, often in steps, until in many cases you own 100% of the property and pay no more rent. Each time you staircase, the additional share is bought at the property’s current market value, so the cost depends on how prices have moved. Staircasing usually involves a new valuation and a remortgage, and WIS Mortgages can guide you through the process and arrange the additional borrowing when you’re ready to increase your share.

Costs to Consider With Shared Ownership

Shared ownership makes buying more affordable upfront, but it’s important to budget for all the costs involved. Alongside your mortgage payment, you’ll pay rent on the share you don’t own, and this rent typically rises each year in line with an agreed formula. Most shared ownership homes are leasehold, so you may also pay ground rent and service charges, particularly in flats. There can be restrictions on selling, as the housing association often has first refusal to find a buyer or buy back your share. None of these should put you off, but they’re important to understand fully, which is why WIS Mortgages makes sure you have the complete picture before you commit.