What are Shared Ownership mortgages and how do they work?

What is a shared ownership mortgage?

A shared ownership mortgage allows you to buy a share of a home rather than the whole property.

You'll typically buy between 10% and 75% of the property's value. A housing association owns the remaining share and charges you rent on it each month.

You'll then:

• Own part of the property
• Have a mortgage on your share
• Pay rent on the remaining share
• Usually pay service charges if they apply
• Be responsible for maintaining the property

Most shared ownership homes are leasehold properties. This means there may be rules and charges linked to the lease you'll need to understand before buying.

Why choose a shared ownership mortgage?

For many buyers, mortgage affordability is the biggest challenge. It’s difficult to save for a mortgage deposit while also paying rent every month.

A shared ownership mortgage could help because:

• The deposit is based on the share you're buying
• The mortgage is smaller than buying outright
• Monthly costs can be more manageable
• You could become a homeowner sooner
• You can increase your ownership over time

Let's say a property is worth £300,000.

Buying it outright might feel impossible today.

But buying a 25% share means you're purchasing £75,000 instead of £300,000. That can significantly reduce the amount you need to save and borrow.

How does shared ownership work?

The process is simpler than it sounds.

Step 1: Check you're eligible

Before anything else, you'll need to meet the eligibility criteria for the scheme. We'll cover this in more detail below.

Step 2: Find a shared ownership property

Once you've confirmed you're eligible, you can start looking for available properties through housing associations and approved providers.

Step 3: Decide how much you'd like to buy

You'll choose the share you want to purchase.

Many buyers start with a share between 25% and 50%, although some schemes allow purchases from as little as 10%.

Step 4: Apply for a mortgage

You'll apply for a mortgage on the share you're buying.

Not all lenders offer shared ownership mortgages, which is why expert advice is especially valuable.

Step 5: Move in and make your monthly payments

Your monthly costs may include:

• Mortgage repayments
• Rent paid to the housing association
• Service charges
• Buildings-related costs outlined in your lease

Step 6: Buy more shares later if you want to

Many buyers gradually increase their ownership. This process is called staircasing. Despite the name, no actual stairs are required.

Who can apply for shared ownership?

Shared ownership is aimed at people who can't afford a suitable home on the open market.

You might be eligible if:

• You're a first time buyer
• You used to own a property but can't afford to buy now
• You're already in a shared ownership property and are looking to move
• You're setting up a new household after a relationship breakdown
• You can show that buying outright isn't affordable

Income limits

Your household income will usually need to be:

• Less than £80,000 per year outside London
• Less than £90,000 per year in London

Can first time buyers get a shared ownership mortgage?

Yes. In fact, first-time buyers are one of the main groups the scheme was designed to help.

If you've struggled to save a large deposit or can't borrow enough to buy outright, shared ownership could help you get onto the property ladder sooner.

Can previous homeowners apply?

Sometimes. The scheme isn't exclusively for first time buyers.

If you've owned a home before but can't currently afford to buy one, you may still qualify.

For example, this may apply if you've experienced:

• A relationship breakdown
• A significant change in income
• A change in personal circumstances

Special shared ownership schemes

Older People's Shared Ownership (OPSO)

If you're aged 55 or over, you might be eligible for the OPSO scheme

One of the key benefits is once you own 75% of the property, you typically won't pay rent on the remaining 25%.

Home Ownership for People with Long-Term Disabilities (HOLD)

The HOLD scheme is designed to help people with long-term disabilities who need a suitable property and can't access one through other homeownership schemes.

How much deposit do you need?

One of the biggest attractions of shared ownership is the smaller deposit requirement.

Most lenders ask for at least 5% of the value of the share you're buying.

Example

• Property value: £250,000
• Share purchased: 40%
• Value of share: £100,000
• 5% deposit: £5,000

Instead of needing a deposit based on the full £250,000 purchase price, you'd only need a deposit based on the £100,000 share.

That's what makes shared ownership achievable for many buyers.

What mortgage requirements do lenders look at?

Like any mortgage application, lenders will assess your circumstances carefully.

Income

Lenders want to see that you can comfortably afford:

• Mortgage repayments
• Rent payments
• Service charges
• Day-to-day living costs

Credit history

A good credit record [JB3.1]can improve your chances of finding a competitive mortgage deal.

If you've had credit issues in the past, don't panic. Some lenders are more flexible than others.

Employment

If you’re a PAYE employee, you’ll need to show your payslips and bank statements.

If you're self-employed, you'll normally need tax calculations, tax year overviews or business accounts.

Can you get a shared ownership mortgage with bad credit?

Possibly.

The options available will depend on:

• How serious the credit issue was
• How recently it happened
• Whether it's now been resolved
• Your overall financial position

Some lenders take a more flexible view than others.

That's why it's worth speaking to one of our mortgage advisers before ruling yourself out.

What costs do you need to budget for?

It's important to look at the full picture before applying for a shared ownership mortgage.

Mortgage repayments

Your mortgage payment is based on the share you own.

Rent

You'll pay rent on the share owned by the housing association.

Service charges

Many properties have service charges to help maintain communal areas and shared facilities.

Maintenance costs

Even though you only own part of the property, you'll often be responsible for repairs and maintenance.

Solicitor fees

You'll need legal help to purchase the property.

Valuation fees

You may need property valuations when buying further shares or selling.

Stamp Duty

Shared ownership Stamp Duty can be complex. The amount you pay depends on factors such as the property's value, the share you're buying and how you choose to pay the tax.

Shared ownership vs buying outright

Both options have advantages.

Shared ownership

Might be suitable if:

• You’re struggling with saving a deposit
• You can't borrow enough to buy outright
• You want to become a homeowner sooner

Buying outright

Might be suitable if:

• You can afford to buy the property outright
• You want complete ownership immediately
• You don't want to pay rent alongside a mortgage

The right option depends entirely on your circumstances.

What are the advantages of shared ownership?

Shared ownership offers several benefits.

Smaller deposit

You're only buying a share of the property, which means less money upfront.

Smaller mortgage

Your borrowing requirements are lower.

Earlier homeownership

You may not have to spend years saving for a larger deposit.

Staircasing opportunities

You can often increase your ownership later.

Benefit from house price growth

If your share increases in value, you'll usually benefit from that growth when you sell.

What are the disadvantages?

It's important to understand the drawbacks too.

You'll still pay rent

You're a homeowner, but you'll continue paying rent on the share you don't own.

Service charges may apply

These can add to your monthly costs.

Most properties are leasehold

That means additional rules and responsibilities.

Selling can be more complicated

Housing associations often have rights and obligations that don't apply to standard property sales.

Staircasing isn't free

Valuation and legal costs usually apply each time you buy additional shares.

What is staircasing?

Staircasing is the process of buying a larger share of your property after you've moved in.

For example:

• 25%
• 50%
• 75%
• 100%

Many buyers use staircasing to gradually move towards full ownership.

How much does staircasing cost?

Typically, you'll need to budget for:

• The value of the additional share
• Solicitor fees
• Valuation fees
• Mortgage fees if additional borrowing is needed

Can you own 100% of the property?

Often, yes. Many shared ownership schemes allow you to staircase all the way to full ownership.

However, not every property works in exactly the same way, so it's always worth checking the lease details before buying.

Can you make improvements to a shared ownership home?

Usually, yes. But major changes may need approval from the housing association first.

The exact rules depend on your lease agreement. If you're planning significant alterations, it's always best to check before starting work.

Can you rent out a shared ownership property?

Generally, no. Most shared ownership lease agreements restrict subletting.

That's because the scheme is designed to help people live in the property as their main home.

What happens if house prices go up?

If your property's value rises, the share you own may increase in value too.

That's good news when you come to sell.

However, future staircasing purchases may become more expensive because you're buying shares based on the property's current market value.

What happens if house prices fall?

The opposite can also happen. If property prices fall, future shares you buy through staircasing could cost less than they would have previously.

How do you sell a shared ownership property?

Selling a shared ownership property is a little different from a standard sale.

In many cases:

1. You notify the housing association
2. They arrange a valuation
3. They may have the opportunity to find a buyer
4. If no buyer is found within a specified period, you may be able to market the property more widely

Can you move from one shared ownership home to another?

Yes. Many shared owners move home as their circumstances change.

You can't usually own another property at the same time, but moving from one shared ownership home to another is possible if you meet the relevant criteria.

Can you remortgage a shared ownership property?

Yes. Many homeowners remortgage to:

• Secure a better rate
• Reduce monthly payments
• Borrow more money for staircasing
• Move onto a new mortgage deal

The process is broadly similar to a standard remortgage, although the housing association may need to be involved.

How to find the right shared ownership mortgage

Not all lenders offer shared ownership mortgages.

And even among those that do, criteria can vary significantly.

That's why it pays to shop around and compare your options.

The right mortgage for one buyer may not be the best option for another.

You may be looking for:

• A fixed rate for payment certainty
• A tracker mortgage
• A variable-rate mortgage
• Lower monthly payments
• Greater flexibility

Whatever you're looking for, expert advice can help you understand your options and find a deal that's right for you.

Is shared ownership worth it?

For many buyers, yes. Shared ownership can provide a practical route onto the property ladder when buying outright isn't currently affordable.

How much mortgage can I get?

This depends on your income, outgoings, deposit, and lender affordability checks.

Do I need a deposit?

Usually yes. Most lenders require a deposit, often from 5% of the share you're buying.

How long does the process take?

Timescales vary, but shared ownership purchases often involve the mortgage lender, solicitor, and housing association, so it's worth allowing several weeks for the process.

Can I own another property?

No. Shared ownership is intended for people who need help buying their main home.

Ready to explore your options?

Shared ownership isn't right for everyone. But for many buyers, it's a valuable stepping stone towards homeownership.

If you're wondering whether you qualify, how much you could borrow or which mortgage options might be available, we're here to help.

Our advisers can explain the ins and outs, answer your questions, and help you compare mortgages from across the market. So whether you're just starting your search or you've already found your perfect pad, we'll help you move forward with confidence.

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