Shared Ownership Mortgages - A Brief Module

Shared ownership can be described as, “a partnership in the ownership of a house.” Shared ownership mortgages allow the borrower and the mortgage lender to jointly purchase a property.

Shared ownership allows the borrower to purchase a percentage of the property which is not preset and could vary anywhere from 25% to 50%, and they pay rent for the remaining portion. This way, one is able to start the process of part owning their own property and thus reducing their rent and also enabling them to make mortgage payments.

Shared Ownership is also termed as a ‘'part buy/ part rent'. In this, it differs from other types of mortgages. That is, one buys some percentage share of a property owned by the housing society. One can start off with a small share in the property and gradually buy more shares of the property and this term is also called as ‘stair casing.’

Some points to look for in a Shared Ownership application would be:

· The percentage of shares one wants to buy in the property. · The amount of the deposit one plans to invest. · The rent one has to pay dependent on the percentage of ownership and also the remaining mortgage amount.

One repays part of the mortgage while also paying rent. Shared ownership mortgages are very valuable to home buyers who cannot afford to buy properties and also it is popular with first-time home buyers.

Shared ownership mortgages were in the past seen as a risky option by mortgage firms, but these days they are gaining acceptance mainly due to tough competition in the market and also due to rising property costs.

When buying a shared ownership property, one only buys a certain percentage in the property, usually 25% to 50% from a housing association. Although this is affordable, as only a small percentage of the property is owned one may miss the equity growth with rising prices. So this can be a disadvantage.

So through this type of mortgage, a purchaser can buy a share or a part of a property and also pay rent for the remaining portion. Most shared ownership schemes are offered through the housing associations. Nowadays, commercial concerns are also offering shared ownership properties so as to attract more buyers.

Special Offer....