Best shared ownership mortgage deals

What is a shared ownership mortgage?

A shared ownership mortgage is a scheme backed by the government that lets you buy a share of a property (usually between 10% and 75%) and pay rent on the rest. Over time, you can buy more shares in the property if you want to, which is called staircasing.

The scheme is for people who can’t afford to buy a home outright. You still need a mortgage for the part you’re buying, but the deposit needed will probably be lower because you’re only buying a share of the property

It’s really important to understand that the home will be leasehold. Normally with leasehold properties, you’ll need to pay service charges and ground rent as well as your rent and mortgage payments.

Why choose a shared ownership mortgage?

Shared ownership can offer a few clear benefits:

• Lower deposit and smaller mortgage needed
• Chance to get on the property ladder sooner
• Option to increase your share over time when you're ready

Shared ownership mortgages can work well if your income is limited or you can’t afford to buy in your local area and generally mean your monthly costs are lower than buying the full property with a standard mortgage.

How does shared ownership work?

You have to apply through a housing association or local Help to Buy agent. Once you’ve been accepted, you can start looking at available shared ownership homes in your area. Once you’ve found a home, you’ll apply for a mortgage on the share you want to buy. You’ll also need to budget for your rent, service charges and any other fees that come with the property. You can usually buy more shares in the future if you want. If you end up owning 100 percent of the home, you won’t have to pay any rent.

Who can get a shared ownership mortgage?

Shared ownership is aimed at first-time buyers and those who don’t already own a home. You might also be able to get a shared ownership mortgage if you’ve already been a homeowner but can’t afford to buy again. To be eligible for a shared ownership mortgage your household income must be less than £80,000 per year, or £90,000 if you live in London. You’ll also have to prove that you’re not in mortgage or rent arrears, and you have a good credit history. As with other mortgages, you’ll be expected to pass your lenders affordability checks.

If you’re over 55, there’s a separate Shared Ownership scheme called Older People’s Shared Ownership (OPSO). If you’re eligible for this scheme, once you own 75% of your home, you don’t to pay rent on the other 25%

People with long-term disabilities can apply for Shared Ownership properties if they can't find a suitable home in other Help to Buy schemes (if you need a ground floor property, for example). This is called Home Ownership for People with Long-Term Disabilities (HOLD).

If you’re self-employed, you’ll need to provide tax returns or business accounts.

How to find the best shared ownership mortgage deals

Not all lenders offer shared ownership mortgages, so it’s important to compare your options. We work with over 90 lenders and can help you find the best deal for your circumstances.

Some lenders offer fixed rate deals for shared ownership, while others offer variable or tracker options. Your L&C mortgage adviser will explain how they work and help you choose the right one.

Making repayments on a shared ownership mortgage

Your monthly costs will include your mortgage payment, rent on the share you don’t own and any service charges. Your repayments depend on the size of your share and the terms of your agreement with the housing association.

If you buy more of the property later on, your rent will go down as your ownership share goes up. If you reach full ownership, you won’t have to keep paying rent but will still be responsible for service charges if your property is leasehold.