Myth busting: Shared Ownership

The Government’s Help to Buy Shared Ownership scheme has been highly publicised as an affordable route to home ownership for many people requiring assistance to buy a home.

We have attended a number of Help to Buy Shows and were frequently asked the same questions about the scheme; and we also heard a lot of myths and misconceptions that we were happy to bust! To separate the myths from the facts, we have produced this myth-buster guide.

It is really 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 huge savings

You will need a deposit, enough to pay for solicitor’s fees and any removal costs. That is the same when buying a home with any type of mortgage. With Shared ownership however, the deposit you need is only five percent of the price of the share you will be buying – not the full price of the home.

It is too complicated

Buying any property is complicated, that’s why lenders have qualified mortgage advisors, legal work is supported by conveyancing solicitors and also independent mortgage advisors are often recommended by housing associations to advise you on what you can afford, and ensure the correct processes and checks are undertaken.

Most people earn too much to qualify

Shared Ownership is designed specifically for those buying in areas where house prices are high, and they can’t stretch to buying on their own without assistance. You will need to earn enough to cover a mortgage payment, subsidised rent and other household outgoings, but earn less than £80,000 per year or £90,000 per year if you live in London.

Paying rent and a mortgage – it must be more expensive?

If you buy through Shared Ownership you will have a mortgage on the share that you buy and pay a subsidised rent on the share you don’t, so it generally works out less per month than renting privately and definitely less than buying the full 100% of your home.

It’s only open to young people or first time buyers

The scheme is open to people over 18 years, although some lenders require their applicant(s) to be 21 years or over. However as long as the applicant(s) do not own another property and can complete the affordability checks, it is not age restricted and not limited to first time buyers.

You are told how much you can afford and what share to buy

That’s a good thing.  It is so you don’t overstretch yourself financially and try to borrow more than you can afford to pay back.

There is loads of repetitive form filling

There is a lot of admin, but the result is being able to find a home of your own. You will need to register with a Help to Buy agent and this means you won’t have to track down and register with every housing association in your area. You will just complete one set of initial registration forms and one affordability and eligibility check. You can find an agent on the Own Your Home government website.

Shared Ownership homes are just tiny starter flats

Some may be starter homes, but they are not smaller than any other starter home. In fact they have to meet higher standards of space, storage and eco-efficiency than typical new-builds.

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 there is no reason why you can’t have a lodger to live there with you. It is the ownership that you share with the housing association, not the living space.

I wouldn’t be able to keep a pet or have the freedom to decorate as I wish

Having a pet would depend on the development, that is the same as most apartment developments on the open market.  It’s worth checking with the housing association of the development you are interested in.  However, decorating IS your choice. You can finally have the bright red living room you’ve always wanted.

So, buying is ok, but I’ve heard I need permission to sell and it’s complicated when you want to move on

Shared Ownership reflects the housing market in general. When the market is good, it is good for all properties. But when it is bad, it is bad for Shared Ownership too.  The one difference is that your housing association will have first opportunity to find you a buyer.  When the market is good, they will have a ready-made list of people wanting to apply and in more difficult times most will let you open it up to estate agents after a couple of weeks.

If you would like to speak to one of our qualified mortgage advisors about Shared Ownership mortgages please contact us today and make an appointment.


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