Shared Ownership & Shared Equity
Shared ownership schemes are designed for people who are unable to raise a large enough mortgage to buy a property outright - generally first-time buyers. You are then either given a low-interest loan by the government and housing association to pay for the share you don't own, or you pay rent on it to a housing association, depending on which shared ownership programme you choose. This can be a stepping stone to full ownership and in time you could increase the amount that you own (potentially up to 100%) thereby reducing the rent you are required to pay in a process called staircasing.
This involves buying a newly built home outright so that no rent is payable. Generally only 5% of the purchase price will be funded by the buyer directly. 20% will be loaned to the buyer by the developer building the home or in conjunction with the Government (under the FirstBuy or HomeBuy schemes). The terms of such loans vary so it can be wise to shop around and certain developers will only lend to priority groups such as first time buyers. The remaining 75% is provided by the buyer's lender by way of a mortgage. This option can therefore provide a foot on the ladder for buyers with very little in the way of a deposit.
Housing Associations have been authorised to run shared equity schemes for people who have difficulty buying a home. The Housing Associations, HomeBuy or FirstBuy agents, will decide if you can buy a home this way. Usually selection will be based on your household income and factors making it difficult for you to buy a home in your area.
Help To Buy
This new shared equity Government-backed scheme was announced in the March 2013 budget and is designed to encourage lenders to provide 95% mortgages. The government will underwrite the risk on up to 20% of the loan and unlike other shared equity schemes, the guarantee does not require a contribution from developers and applies to all property purchases (not just new build properties).
As with other shared equity schemes buyers will need a 5% deposit with 75% being funded by a lender and the remaining 20& being funded by the Government (to be repaid when the property is sold).
Once your application to buy your home through one of the above schemes has been approved, we can proceed with the purchase using the same procedure as detailed in our ‘Purchase’ section.