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Shared Ownership Mortgages

A guide to shared ownership mortgages

What shared ownership involves, the costs to plan for, and how to apply for a mortgage on a shared ownership home.

2 min readWritten by Ali Jabbar

Shared ownership gives you a realistic way onto the property ladder when buying a home outright is out of reach. You buy a share of a property, take a mortgage on that share only, and can grow your stake later through staircasing. This guide walks through how the scheme works and where the mortgage fits in.

How does shared ownership work?

With shared ownership you buy a share of a home from a housing association, usually between 25% and 75% of its full market value, and the property can be a new build or a resale. You take a mortgage on the share you buy and pay a subsidised rent on the part you do not own.

That rent is usually set at around 2.75% a year of the value of the housing association’s share, which normally works out lower than renting the same home privately. Add your mortgage payment on top and the monthly cost can still come in below buying outright or renting on the open market.

Most shared ownership homes are leasehold, so alongside your mortgage and rent you will need to budget for service charges and any ground rent the lease sets.

What deposit do you need?

Your deposit is worked out on the share you are buying, not the full price of the property. Say a home is worth £300,000 and you are buying a 50% share: your mortgage is based on £150,000, and a 5% deposit on that share comes to £7,500.

Some lenders will accept a deposit as low as 5% on a shared ownership purchase, much like standard 95% LTV mortgages, though a larger deposit usually opens up better interest rates. Your adviser can tell you exactly how much you need to put aside.

Costs beyond the deposit

Beyond the deposit there are solicitor fees, a valuation and, on some deals, a mortgage arrangement fee to pay. Stamp duty land tax, the government tax on property purchases, may also apply. It depends on what your share is worth and whether you choose to pay in stages or on the full market value upfront.

It is worth setting money aside for moving costs, furniture and a rainy-day fund too. Your adviser will give you a clear breakdown of everything you need before you commit to anything.

How to apply for a shared ownership mortgage

Start by checking whether you qualify with your local Help to Buy agent, who will look at your income and your circumstances. Once they approve you, you can reserve a property and get your mortgage application under way.

Not every lender offers a shared ownership mortgage, so a broker gives you a wider set of products to choose from. Your adviser handles the application and deals with the housing association, keeping things moving through to completion. If this is your first purchase, our first-time buyer mortgage guidance covers the wider process too.

Written and reviewed by

Ali Jabbar

Role
Managing Director
Specialism
Complex Income & First-Time Buyers
Regulator
FCA register
“Most shared ownership cases come down to one thing: the right lender for your circumstances. We’ll find them — and walk you through every step.”
— Ali Jabbar
Get a quoteor call 020 3829 9515

More from Shared Ownership Mortgages

Browse all guides

  1. Shared ownership eligibility criteria

    Who qualifies for shared ownership, the income caps that apply, and how priority groups work.

  2. Staircasing explained

    How to buy additional shares in your shared ownership home and what it costs at each stage.

Ready when you are

That's the shared ownership guide. The next step is your situation, your numbers, your circumstances — and that's a conversation. Free, no obligation, take it from there.

Get a quoteor call 020 3829 9515