Shared ownership was introduced for people on low incomes who would not normally be able to acquire a mortgage in the conventional way.
Through shared ownership you buy a share of a property, which is typically supported by a mortgage.
Rent is charged on the remaining share that is owned by the housing association or local authority. The higher the share purchased, the less rent you will have to pay.
The rent charged is kept as low as possible so that the total outgoings are not much more than they would be for renting a property in the traditional method.
Homes are normally purchased with a 50 % share to start off with, however, smaller or larger shares can be purchased (as little 25 % or as much as 75 %). The size of the share that you can buy will normally depend on your income and savings.
As long as your income is sufficient to meet the increased payments, you may be able to buy more shares later on, in order to completely own your home. This is known as “Staircasing”.
If, later on, you decide to sell your home, you will need to inform the landlord who may want to buy the share back from you to sell on to other households. The property is then sold at market value and you will benefit from any equity which has accumulated on your share.
If your landlord decides not to buy the share back, then you can either:
- Sell the share to another household nominated by your Landlord, or
- You can fully staircase your share to 100% so that you then own the property outright, and can then sell it in the usual way.
If you would like more information about this or any other mortgage product offered by Cook Allen & Associates, please call 0845 257 9301, or complete our brief questionnaire and one of our qualified mortgage advisers will get in touch to discuss you mortgage requirements.
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