How Does Shared Ownership Housing Work?

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How Does Shared Ownership Housing Work? By Peter Kenny

Over recent months the mortgage market has fallen into a sharp decline as a result of the global credit crunch that swept across the nation last summer and has been wreaking havoc in the financial markets ever since. For first time buyers the situation in the mortgage market has made life very difficult, as despite falling house prices many can still not realise their dreams of getting onto the property ladder because they can not longer get a mortgage due to the change in credit conditions. Since the onset of the global credit crunch the number of mortgage products has fallen, and mortgages that once provided a financial lifeline to first time buyers such as 100% mortgages have been taken off the shelves. The cost of borrowing has also gone up, with higher arrangement fees and far higher deposit requirements in place from lenders. Interest rates have been rising, with the lower rates being offered only to those with a hefty deposit to put down. With so many hurdles in their way many first time buyers still find that they are priced out of the market due to lack of affordability. Although many may decide to turn to renting instead, at least for the short term, there is another solution that could prove effective, affordable, and could provide them with a helping hand onto the property ladder, and this is known as shared ownership housing. Shared ownership is a scheme that is run in conjunction with housing associations, and in short consumers that opt for this scheme take out a mortgage for a percentage of the value of the property and then pay rent on the remaining percentage to the landlord, which is the housing association. The percentage that can be purchased will vary and will be specified by the housing association, but it is important to remember that you can buy additional shares of the property over time until you own the property fully, or you may prefer to stay there on a shared ownership basis until you are ready to sell your share and move on. One of the main benefits of shared ownership is that you will only need to take out a small mortgage, as you will only be purchasing a percentage of the property rather than the whole property, and this increases affordability both in terms of your deposit and your monthly repayments. You will, of course, be paying rent on the remaining share, so you need to work out whether you can afford both the rent amount and the mortgage repayment before you commit. Shared ownership is a good, effective way to get onto the property ladder for first time buyers,
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especially in the current financial climate where mortgages are difficult to come by and repayments and deposit levels are so high for the average first time buyer. As rents continue to rise shared property ownership becomes a more attractive option. Rising interest rates make shared ownership more cost effective especially during the current period of the global credit crunch where worldwide problems are apparent. Peter Kenny is a writer for The Thrifty Scot, please visit us at and

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The Basics Of Shared Ownership Mortgages By Michael Sterios

Shared ownership mortgages are specialist mortgages that are designed to cater for purchasing property through shared ownership schemes. Shared ownership schemes are also known as shared equity schemes and have become a popular method for first-time-buyers to get a foot on the property ladder if they do not have the funds necessary to pay for the deposit required for more traditional mortgage products. At present there are only a few lenders who offer shared ownership mortgages, however, the list is growing. Even the Government has showed interest in becoming involved in shared ownership schemes in the wake of increasing property prices and low home affordability. A shared ownership scheme allows a property buyer to purchase part of a property and rent the remainder from the property developer. This means that the developer and the property buyer jointly own the property. The buyer can fund the purchase of the portion of the property they purchase with shared ownership mortgages and therefore get a foot onto the property ladder without having to pay for a cash deposit. As time goes by, the buyer can purchase additional portions of the property until such time as they own it outright. Shared ownership mortgages can assist the buyer in funding the purchase of the additional portions of the property. The amount of money that is required to purchase the additional portions of the property will be assessed on the market value of the property at the time. This means that as property prices rise, the amount of money that will be required to fund the additional purchased will also rise. Any repairs and maintenance on the property will most likely be required to be funded by the occupant, regardless of the fact that the property developer will still own part of the property. Shared ownership mortgages are usually only available to applicants who are in full-time permanent employment and who have a clean credit history. The target market for shared ownership mortgages is hard working individuals who are good candidates for keeping up with the repayments on the mortgage but who may not have the means to save enough cash for a deposit. Potential applicants who have an intermittent working pattern or who suffer from adverse credit may not be successful in securing shared ownership mortgages. There are, however, more and more shared ownership mortgage products entering the market as property prices continue to rise and home ownership becomes less affordable to first-time-buyers. This may mean that potential applicants with intermittent working patterns or light adverse credit files may soon be eligible to apply for such home loan products. Independent mortgage advisors are able to advise individuals as to whether they qualify for shared ownership mortgages and whether they are the right product to consider in the first place. Some first-time-buyer applicants may be better suited to other types for home loans such as guarantor mortgages or home loans with high loan-to-value ratios that do not require a deposit. Independent mortgage advisors should be able to advise which products are the most suitable for borrowers.

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Michael Sterios is a writer for

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