EVERYTHING YOU NEED TO KNOW ABOUT SHARED OWNERSHIP
Looking into buying your own property can feel like a daunting prospect. There’s so much advice and information out there for first time buyers, not to mention the guidance you might receive from friends and family. Furthermore, the shared ownership scheme can feel like an additional puzzle to solve. No wonder it can appear that there are endless hurdles in the way of your home ownership dream. Here we offer a simple, jargon free explanation to shared ownership, share some facts about the scheme and dispel some common myths about how it works.
Simply speaking, shared ownership is a part-own, part-rent scheme. This route allows first time buyers to get onto the property ladder with a smaller deposit than the regular mortgage system. You choose to buy a percentage of the home, anywhere between 25% - 75% of the full market value. Buyers take out a mortgage for this portion and put down a deposit according to that figure. The remaining percentage is then accounted for through discounted rent to a housing association. These combined monthly payments work out cheaper than buying the property outright or renting it privately.
Here we set the record straight and tackle some common misconceptions with some facts about the scheme:
A shared ownership home does not mean you share your home with someone else.
Shared ownership homes are available throughout the country, not just in London.
You can buy a high-spec home in a great location within a sought-after development. Ascot House is a good example of this.
You can buy a three or four-bedroom house through shared ownership, not just an apartment.
Buyers can choose to decorate their home any way you like.
Shared ownership is open to any occupation, not just key workers.
You can buy more shares whenever you feel ready to, up to owning 100% of the home. This is called ‘staircasing’.
To secure a shared ownership home in London, your total household income can’t exceed £90,000 and the threshold is £80,000 in all over areas of the UK.
At some developments, priority is given to buyers who work or live locally.
The minimum deposit is usually 5% of the share you are buying.
The two dreaded words that can’t be avoided when buying a home; stamp duty. With shared ownership you will have two options. Either pay the stamp duty on the percentage you choose to buy or go for it and pay stamp duty on the full market value of the home. If you decide to pay stamp duty when staircasing, you’ll only have this expense when you reach 80%.
Stress Free Application
The application process is straightforward, so no need to panic. You’ll be guided through it by the housing association and we’ve broken it down to 4 easy steps:
- 1. Before you start the journey, just take some time to make sure your credit history is in good shape.
- 2. Once you’ve found your dream home, apply to the relevant housing association.
- 3. Next, there will be a brief assessment to confirm your affordability. This is carried out by an independent financial advisor who will evaluate your individual situation. Essentially, they’ll ask all the right questions to ensure that the combined mortgage, service charge and rent is no more than 45% of your income.
- 4. Next, the independent financial advisor can recommend you can determine the best initial share to start at.
Weighing Up The Numbers At Ascot House
In summary, here are the all-important figures for the homes at Ascot House:
A studio apartment with a full market value of £305,000 will be £76,250 for a 25% share. The 5% deposit for this home will be £3,813.
A one-bedroom home with a full market value of £315,00 will be priced £78,750 for a 25% share. The 5% deposit needed to secure this home is £3,938.
A two-bedroom home with a full market value of £408,000 will be priced at £102,000 for a 25% share. The 5% deposit need to secure this home is £5,100.
With the way life is evolving right now, access to the outdoors for work breaks is really important, so it’s worth highlighting that all the homes at Ascot House have their own spacious balcony and access to the incredible roof terrace and podium gardens.