About Shared Ownership
If you can’t quite afford the mortgage on 100% of a home, Shared Ownership provides you with the perfect opportunity to get your foot on the property ladder. With Shared Ownership, you buy a share of your home and pay rent on the remaining share. Even though you are only purchasing a share, your home will definitely feel like your own as you are free to decorate it to your own taste.
After you become the owner, you can buy more shares in your home and eventually purchase the property outright. Buying a larger share is called ‘stair-casing’ and as you buy more shares, you pay less rent. In some instances, you will have to live in your home for a year before you can buy more shares and in rural areas, stair-casing can sometimes be restricted. You can read our guide to staircasing here.
You will need to take out a mortgage to pay for your share of the home’s purchase price, or fund this through your savings. Shared Ownership Homes are always leasehold, however after the final staircasing, the freehold will be transferred to you.
Eligibility
You can buy a home through shared ownership if all of the following are true:
- your household earns £80,000 a year or less
- you cannot afford all of the deposit and mortgage payments for a home that meets your needs
- you must be over the age of 18 and living in the UK.
- you must be a British or EU/EEA citizen with a settled status, or
- have indefinite leave to remain in the UK.
One of the following must also be true:
- you’re a first-time buyer
- you used to own a home but cannot afford to buy one now
- you’re forming a new household – for example, after a relationship breakdown
- you’re an existing shared owner, and you want to move
- you own a home and want to move but cannot afford a new home that meets your needs
For some homes you may have to show that you live in, work in, or have a connection to the area where you want to buy the home.
Military personnel will be given priority over other groups through government funded shared ownership schemes.
Applicants for Older Persons Shared Ownership must be over 55 year olds.
If you are applying jointly with another person to buy a home, all parties must meet these eligibility criteria, and the assessment of affordability will be based on the financial circumstances of both.
If you are applying as a sole applicant, only you would need to meet this criteria but the gross household income of all your household will be considered and will need to be under the £80,000 threshold.
Homes are offered on a first come first served basis. For more details click here
If you already own your own home
When you buy a shared ownership home, you must have:
- formally accepted an offer for the sale of your current home (called ‘sold subject to contract’ or ‘STC’)
- written confirmation of the sale agreed (called a ‘memorandum of sale’) including the price and your intention to sell
You must have completed the sale of your home on or before the date you complete buying your shared ownership home.
How much will it cost?
All purchases must be affordable and sustainable. In order to qualify for a shared ownership home, you will need to show that you can afford:
- the mortgage repayments; and
- the monthly rent on the share of the property you don’t own; and
- any service charge and/or management fee for the services you receive.
Unless you are a cash buyer, you will also need to provide a deposit for the property in order to get a mortgage. This will depend on your individual circumstances but will usually be 5% or 10% of the share in the home that you are buying. 100% mortgages are not accepted. For example, for a property valued at £200,000 in which you are buying a 50% share, you will need a deposit of £5,000 or £10,000.
During the sales process, you will also need to pay for:
- Reservation fee to hold the property
- Mortgage valuation and survey
- Financial Assessment
- Legal fees and searches
- Moving costs
If you have got your deposit, done the maths to work out that you can afford a Shared Ownership Property, and found a property that you are interested in, you can get in touch with our sales and marketing consultants who will happily answer any questions you may have. They will also explain the process in more detail and provide up-to-date information on homes or plots that are available and when the property may be ready to move into.
Once you are happy that you have found the right property, you will need to complete an application which includes a financial assessment which will be completed by an Independent Financial Advisor appointed on our behalf.
Full details of our Affordability and Surplus Income Policy and our Cash Buyer Policy can be found below:
Affordability and Surplus Income Policy
How do I apply?
f you have got your deposit, done the maths to work out that you can afford a Shared Ownership Property, and found a property that you are interested in, you can get in touch with our sales and marketing team who will happily answer any questions you may have. They will also explain the process in more detail and provide up-to-date information on homes or plots that are available and when the property may be ready to move into.
Once you are happy that you have found the right property, you will need to complete an application which includes a financial assessment, this will be completed by Metro Finance appointed on our behalf.
Metro Finance will request the following information:
- Identification – valid Passport or Driving licence at current address.
- Proof of address – Latest utility bill, Bank or credit card statement (dated in the last 3 months), council tax letter (dated last 12 months), Driving licence if not used for ID already.
- Proof of income
- Employed – Latest 3 months payslips
- Self employed – Latest 2 years tax calculations and overviews
- Latest 3 months bank statements for all accounts held
- Proof of deposit
- Savings – latest 6 months statements showing a build up of funds
- Gifted deposit – latest bank statement showing funds available and signed gifted deposit letter
- Agreement in principle
Note:
Further or different documents may be required dependent on source of deposit.
If using Metro Finance for the mortgage further documents may be required for our internal and lender compliance.
What happens Next?
Reserving your dream home
Once your financial assessment has been approved, you will be able to reserve your home. You will need to pay a deposit of £500 which is deducted from the total purchase price on legal completion and sign and return our reservation checklist.
Once you have reserved a property, this will be taken off the market.
Mortgage and legal advice
If you need to obtain a mortgage to buy your home you will need to speak to an Independent Financial Advisor (IFA), bank or building society. To buy a home, you will need to appoint a solicitor to act on your behalf.
There are now 27 active SO lenders with 15 offering up to 95% lending.
The solicitor will handle the conveyancing for you, explain the terms of your lease and deal with the seller’s solicitor on your behalf. The solicitor will also check contract documents and carry out legal searches.
Exchange of contracts
About eight weeks after reservation, subject to legal and mortgage arrangements being in place, contracts will be exchanged. The balance of the deposit is normally paid at this stage and the whole transaction becomes legally binding. Exchange and completion can be simultaneous or exchange with a fixed completion date up to 14 days.
If the exchange does not take place on the agreed date, the property can be put back onto the open market.
Completing the sale
Now comes the final step of the buying process… the legal completion. This is when your lender releases the funds to pay for your home, at your solicitor’s request.
On the day of completion, one of our sales team will meet you at the property, take meter readings, then once completion of the sale has been confirmed the keys and handover pack will be given to you.
And that’s it…congratulations!…you are now the proud owner of your new home!
If you have any further questions about shared ownership, please check out our FAQs in the contact us section of this website.