What is Shared Ownership?
Shared Ownership, often associated with the Help to Buy scheme, is a government initiative aimed at assisting first-time buyers and home movers in Doncaster to step onto the property ladder without the hefty upfront deposit. This program allows you to purchase a portion of your chosen property, typically ranging from 10% to 75% of its value, and pay rent on the remaining share. The beauty of shared ownership lies in its flexibility, as it permits you to increase your ownership stake as your financial situation improves gradually.
The Inner Workings of Shared Ownership
To embark on your shared ownership journey, you’ll start by making a deposit on the property. The minimum deposit required can vary, influenced by factors such as your credit score and financial stability. While a shared ownership arrangement necessitates securing a mortgage, you’ll only be financing the percentage of the property you’re purchasing. For instance, if you’re eyeing a 40% share of a £170,000 property, your mortgage will amount to £68,000. Your deposit is based on this mortgage amount, so in this example, a 5% deposit would be £8,500.
Mortgage repayments commence once your offer is accepted, and you’ve officially moved into your new home. In addition to your mortgage, you’ll also be responsible for paying rent on the remaining share of the property. While shared ownership involves dual payments, your overall monthly costs should remain more affordable compared to a conventional mortgage.
Costs and Fees to Consider
Like any property purchase, shared ownership comes with a set of associated costs and fees. These may include setup or arrangement charges, booking fees, and solicitor expenses. It’s crucial to clearly understand these additional expenses, as they can vary depending on the specific property you’re buying. Depending on the property’s particulars, your deposit size, monthly payments, and arrangement fees may differ.
Eligibility and Application Process
To determine whether you qualify for the Help to Buy Shared Ownership Scheme, consider the following requirements:
- You must be at least 18 years old.
- For properties outside London, your total household annual income must not exceed £80,000.
- You can be a first-time buyer, someone who used to own a home but can no longer afford one, or an existing shared owner looking to move.
- If you can afford to buy a property on the open market, you may not be eligible for this scheme.
- Demonstrating a clean financial record is essential, including no arrears on mortgages or rent.
- A solid credit history free from CCJs or other credit-related issues is imperative.
While these criteria may seem stringent, they align with the objectives of the Help to Buy Shared Ownership Scheme. If you encounter credit challenges, alternative government mortgage schemes may offer viable solutions. Our experienced mortgage advisors in Doncaster have been assisting first-time buyers for over two decades and can guide you through the process, ensuring you’re well-prepared to explore the realm of shared ownership. For more insights and tailored advice, don’t hesitate to book a free mortgage consultation today.