Shared ownership is a government-backed home ownership mortgage scheme, available to first and second-time homebuyers to help them purchase their home.

The initial share of the property that you’ll actually purchase (and need to secure a mortgage for) is generally between 25% and 75%, which means a much smaller deposit is required.

For example, let’s say you want to buy a £300,000 home. Traditionally, you’d need a minimum deposit of £30,000 for this. However, with shared ownership, you could simply purchase a 50% share (valued at £150,000) which means you would only need a deposit of £7,500 - £15,000 (depending on whether or not a 5% or 10% deposit is required).

So you simply secure and pay for the mortgage on your own share of the home, and pay a subsidised monthly rent on the remaining share to the developer or local housing association.

As you can see, this opens up the possibility of becoming the owner of a gorgeous new home to many more people than would otherwise have had the option.

Watch our video to find out more.

The Shared Ownership scheme is an excellent way to get on the property ladder, own a substantial share of your own home and start building your long-term financial foundation.

Ultimately the buyer's individual circumstances will define the size of the share of the property that they buy, making shared ownership a really flexible scheme for many different people and situations. Here are a few other reasons people may decide to choose to move forwards with Shared Ownership:

• Lower deposits required
• Benefit from any increase in property prices
• Flexibility to sell the share at any time
• Ability to increase your share at any time (see below)

Buyers have the option to increase their share amount at any time during the life of the loan. This is also known as staircasing.

This idea of this process is you (as the owner) will eventually buy the remaining share of the property, as and when you can afford to do so, up to the point of 100% ownership. 

At this point your mortgage repayments will cover the complete value of the property and you’ll no longer have to pay rent to the housing association.

Shared Ownership is not just to help first-time homebuyers. People who have existing Shared Ownership schemes can purchase another. However, there are several qualifying factors to consider. Here are the eligibility criteria for the Shared Ownership scheme:

• Must have a household income that doesn't exceed £80,000 per annum
• Must have a deposit of at least 5% of the share-value of the home you’re purchasing
• Must be a first-time buyer or someone who previously owned a home that can’t afford to purchase the property outright.
• Must presently live in a shared ownership property and want to move
• The shared ownership property must be the purchasers' only home
• You must pass a financial assessment, proving financial capability to buy the minimum share value and monthly payments on the home
• You must meet the local authority requirements    

There's another scheme available to those who are 55 years and older. The Older People's Shared Ownership scheme offers older folks help to buy a shared property. Once they pay 75% of the sale price to the mortgage brokers, they no longer pay rent to the housing association.

People that have a long-term disability and don't have the means to support themselves qualify for another scheme. It is called the Home Ownership for People with Long-Term Disabilities (HOLD) program. This program has benefits similar to the scheme for older folks.

The first step of the application for a shared home ownership mortgage is to speak to the housing association in your local council. They'll also help you determine whether you're eligible. However, the home doesn't have to be council-owned in most cases.

The next step is to contact a lender. Often the housing advisor will assist you with this part of the equity share.

There are strict affordability checks required by the lender. The lender will also require that you provide the deposit money at the time of loan origination. Ensure that you can afford the costs of ownership. Here is a list of ownership costs to be prepared to pay:

• Mortgage fees
• Management fee
• Stamp duty
• Insurance
• Repairs and maintenance
• Service charge (on flats only)

Regardless of whether purchasers participate in a Shared Ownership mortgage, property maintenance costs will solely be the responsibility of you as the homeowner. We urge you to consider all costs before investing in buying a home.

There are a lot of factors to consider before buying a shared ownership home. Here some of the most frequently asked questions:

Is there an age limit on shared ownership?

The only age limitation is that the buyer must be 18 years of age or older. Do keep in mind the special schemes available for those 55 and over.  

Is Shared Ownership better than renting?

For most of those who qualify, shared ownership is much better, in the long term, financially than simply paying monthly rent. The rent money of the shared property is less than the rate charged on the open market. The usual rent fee charged on shared ownership properties is 2.75% of the property value per annum. In most cases, this is less than the money a tenant will pay rent for on a rental, lease, or other housing options.

What is the minimum income for Shared Ownership?

The housing association will determine the minimum income required for the property you are looking to buy, but there’s not a set minimum income requirement for Shared Ownership.

Is Shared Ownership only for first-time buyers?

Shared Ownership is available to both first and second-time homebuyers. Yet, restrictions do apply.

What deposit do I need for a shared ownership mortgage?

Shared Ownership properties typically require a down payment of between 5% to 10%. This deposit is based on the value of the share the buyer is purchasing. The down payment doesn't include moving costs or any of the fees mentioned above.

What happens if I want to sell my shared ownership?

Restrictions apply when selling a Shared Ownership. These homes are resales that must be sold to purchasers unable to buy on the open market. They must meet the criteria for ownership properties eligibility. Other costs are incurred, like expenses associated with selling the share property, conveyance costs, stamp duty fees, and any gain in the worth of the property.