We share the ten key steps you will need to take in order to buy your first home.
The government’s Shared Ownership scheme has been highly publicised as an affordable route to homeownership for many people who need assistance to buy a home. To separate the myths from the facts, we’ve put together this myth-buster guide.
It’s hard to get a Shared Ownership mortgage
Not every lender offers Shared Ownership mortgages, but many do, including Newbury Building Society. It is no harder to get a Shared Ownership mortgage than any other residential mortgage, providing you have the required deposit, a good credit rating, and get qualified advice.
You need lots of savings
As with buying any property, you’ll need your deposit, enough to pay for solicitor’s fees and any removal costs. So, you do need some savings ready. However, the benefit of Shared Ownership is that you only need a minimum of 5% of the price of the share you’re buying, not the full price of the property.
It’s too complicated
We hate to break it to you, but buying any property is complicated! That’s why lenders have qualified mortgage advisers, legal work is completed by conveyancing solicitors, and independent mortgage brokers or advisers are often recommended by housing associations when buying a shared ownership property. These professionals are here to support you through the process, and you can ask them questions throughout your purchase.
Most people earn too much to qualify
Shared Ownership is designed to help people get onto the property ladder in areas where house prices are high. You will need to earn enough to cover a mortgage payment and subsidised rent, as well as other household bills and outgoings. As long as you earn less than £80,000 a year (or £90,000) if you live in London, you qualify.
It’s only open to young people or first-time buyers
The scheme isn’t just for first-time buyers. In fact, at Newbury, we’ve helped a variety of people in different circumstances to purchase through shared ownership – including people starting over after a divorce, older couples looking to downsize, and young professionals relocating to a more expensive area. The scheme is open to anyone aged 18 or over, although some lenders will require their applicant(s) to be 21.
You are told how much you can afford and what share to buy
That’s a good thing and will be the case whenever you’re purchasing any kind of property. These affordability checks are in place to ensure that you don’t overstretch yourself and will be able to make your repayments, even if they increase in the future.
There’s loads of repetitive form filling
OK, you’ve got us here. There is a lot of admin involved, but the result is being able to find a home of your own! This is also no different from purchasing a property outside of the shared ownership scheme.
Shared Ownership homes are just tiny starter flats
There is a range of properties available through the shared ownership scheme, including flats and houses. Some may be starter homes, but they’re not smaller than buying this kind of home with a standard mortgage.
Doesn’t it mean sharing the house with someone else?
No, not unless you want to! Plenty of people do buy their Shared Ownership home with a friend or partner, but you can live on your own. There’s also no reason that you can’t rent out a room to a lodger in the future. It’s important to remember that it is the ownership of the property you share with a housing association, not the living space.
I wouldn’t be able to keep a pet or decorate how I’d like to
As with most apartment developments on the open market, having a pet is dependent on the development you choose and their rules. It’s worth checking with the housing association of the development you’re interested in early on, especially if this is a dealbreaker for you! However, decorating however you like IS your choice. Whether you’d like to have a bright green kitchen or a black ceiling in your bedroom – go for it. Just don’t knock down any walls without permission!
So, buying sounds ok, but I’ve heard I need permission to sell and it’s complicated when you want to move on
The main difference is that your housing association will have first opportunity to find you a buyer. When the market is moving well, they will often have a waiting list of people wanting to apply. In more difficult times, when the market is slower, most will let you open it up to estate agents after a couple of weeks.
To book an appointment with a qualified mortgage adviser about Shared Ownership mortgages, click here.
YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.