YOUR GUIDE TO SHARED OWNERSHIP A guide to Shared Ownership
WHAT IS SHARED OWNERSHIP? Shared Ownership is a government scheme aimed to help buyers get on to the property ladder. You only need to afford to buy part of a property, not all of it. Shared Ownership allows you to buy your home in stages, as you can afford it. This is called staircasing and you can buy more shares as and when you can afford it. The scheme is suitable if you: Are a first time buyer Are living in rented accommodation or with family Have experienced a relationship breakdown Cannot afford to buy on the open market To start with, a share percentage will be offered, which will be between 25-75 per cent by a Registered Provider (RP). This will be the share you take a mortgage out for and it will become yours. This means that your deposit will be worked out based on the share price. The RP will own the remainder you don t buy and you will pay a discounted rent to them for this share. 25-75%
THE ADVANTAGES OF SHARED OWNERSHIP Shared Ownership helps you get on the property ladder when you thought it wasn t possible. It provides a shorter route to owning your own home. Other benefits include... You can buy additional shares as time goes on and you save more money. In some cases, it can be cheaper than renting. You can sell your Shared Ownership property at any time, and will benefit from any increase in value it s seen since you bought it. Greater independence, control and choice that you wouldn t have when you re renting. Long-term security, you can choose how long you live in your home; this could be for the rest of your life. Shared Ownership allows you to get more for your money.
ADAM & ANNIE: A CASE STUDY Adam and Annie moved in to their home in Crigglestone with their two young children having previously rented just down the road. "We've lived in Crigglestone for around two years now, and in Wakefield all of our life. We moved out of my parents home into rented accommodation, a twobed semi-detached house which was close to Adam's work before we found our dream home. We decided after renting for a couple of years that buying our first home was our priority and we began the search." "We'd been looking to buy for a few years, as we knew that by paying rent our money was going towards nothing. We also knew that my mum and dad were kindly giving us some money for a deposit and thought that this was the best time to buy." "We were paying more in rent there than we are paying for our mortgage now." "Shared Ownership was perfect for us. Although we knew we were only able to purchase a 50% share at first, we knew that once Annie went back to work full time after maternity leave, we'd be able to afford the remaining 50%." "Even though we only own 50% of the property, it feels like we own all of it. This is our own home and we're safe in the knowledge that one day we'll own 100% of it. We love the fact it's a new build home, and we've got a warranty in case something goes wrong, which is great peace of mind."
APPLICATION PROCESS Find property and apply through Help to Buy Low Cost Home Ownership Application approved, pending (RP needs further information) or rejected (case by case) Receive approval email, which will contain next steps and will be sent to your RP Speak to a financial adviser regarding a mortgage and appoint a solicitor to act on your behalf RP then takes over from Help to Buy NEYH and conducts in-depth assessment on your finances Applicant contacts RP to confirm approval and discuss the next steps Mortgage offer is issued Lease is signed Completion and agree a move in date - Yay!
MYTH BUSTER I won t be able to get a mortgage Granted, previously there have not been many options to get a shared ownership mortgage, but more recent times have shown a surge in products becoming available to you. Currently, there are 157 products on the market for shared ownership. They range from 5% - 20% deposits from a range of lenders and have interest rates that rival a standard mortgage. So don t be made to believe that here aren t any options for you! Check out Jon Lord s blog (/news/not-enoughshared-ownership-lenders/) from Metro Finance, he explains that there is actually a thriving market for Shared Ownership mortgages.
MYTH BUSTER I ve only got a small deposit There is no way around the fact you will need to put some money down as a deposit on your new home, but with this scheme it is more manageable due to the way it is worked out. For instance, if you are buying a 50% share of a home worth 100,000 you will be taking out a mortgage for 50,000. This means if you got a mortgage with a 5% deposit you would only have to put down 2,500. I won t be able to decorate my home Even though you won t own 100% of your home straight away, you will be able to put your stamp on it. You can decorate it how you want it, with your own style without having to get consent for it. If you wanted to make a major change, or a structural change, you would have to seek approval just as you would if you had bought with Help to Buy.
MYTH BUSTER I ll be sharing my home with someone else A common misconception that we re seeing more and more is that people think shared ownership means you will be sharing the property with somebody else. This is definitely not the case whatsoever. The scheme is just a stepping-stone in to owning 100% of your home but just with a helping hand along the way. I can t get a new home with Shared Ownership This is absolutely not true; in fact the majority of Shared Ownership cases we deal with are for new build properties. Housing developers have a legal obligation to provide a percentage of their stock to local housing associations, which will be used for Shared Ownership or a similar scheme.
MYTH BUSTER My Shared Ownership home will be sub-standard Your new build Shared Ownership home will be built to the same regulations as an outright sale or Help to Buy property will be. It still has to pass its NHCB check and developer check, so be safe in the knowledge the standard of your property won't be any different to other new build homes. Shared Ownership is a bit of a last option and I won t have real stability This definitely isn t the case. It s an ideal solution if you want to get on the property ladder but don t have the large amount of money that is needed. On average, to buy a house without a scheme like this one of Help to Buy, buyers need around 30,000, which isn t attainable in this day and age with basic monthly savings alone. Shared Ownership is a very good scheme for getting you in a position of a homeowner without the full cost of being a homeowner. Unlike renting, you can feel secure in your new home that you won t have to move when the landlord wants to sell. You make decisions like that, and if you want to stay for the rest of your life, then you can stay!
MYTH BUSTER The monthly costs will be too high if I m paying a mortgage AND rent This is a common misconception due to people s perceptions of how much mortgage and rent payments are. They are not full price payments as the scheme is designed to help you manage the payments in amounts you can afford. That s why at application stage we assess whether you can afford future payments as well as we want to make sure you are taking on something you can manage long term. Shared Ownership homes aren t big enough for a growing family Most of the Shared Ownership sales that we see are two and three-bedroom so they are definitely big enough for a growing family. The beauty of this scheme is that it gets you on the property ladder when you wouldn t be able to afford to and enable you to move somewhere bigger if your situation changes.
MYTH BUSTER The application process is too difficult The Shared Ownership application process involves vital steps that we need to take in order to ensure that you are taking on something that you can afford in the future, and not just now. It probably sounds difficult because it isn t widely understood as other schemes are. In order to apply for Shared Ownership, you have to fill in the application form on our website first so we can see if you meet the criteria for the scheme. This can be done online and you will be informed straight away (providing you applied online) about whether or not you have been successful. It is best to speak to a financial advisor so they can find the appropriate mortgage for you as they can give advice as to which bank is the best lender for you. Some developments my have restrictions on who can buy, but this is usually in place so that local people can access affordable properties in their own area, but this will be highlighted in the property description. If you are unsure then you can give a quick call to the housing association that is selling the properties and they will tell you everything you need to know.
CONTACTING US ANITA FORTH Low Cost Home Ownership Officer: Speak to Anita about any of your Shared Ownership queries. Anita is your representative from Help to Buy NEYH, your local agent. So if you have any questions about your application, give her a call on 0113 825 6189 or email her on anita.forth@yorkshirehousing.co.uk.