There are many options when it comes to buying a home, regardless of whether you’re a first-time buyer or not. Some people opt for a buy-to-let mortgage, whereas others choose to buy the property in full.

One of the best options when buying a property is a shared ownership mortgage – especially if you don’t want to or are unable to fork out a full deposit. But what exactly is a shared ownership mortgage, and how does shared ownership work?

Read on to learn more about shared ownership properties, including how shared ownership works, how you can apply for a shared ownership mortgage, and whether you are eligible for a shared ownership property.

What Is Shared Ownership?

Shared ownership properties differ slightly from houses on the open market – as instead of buying the whole property, you buy a share of the property. It is a great way for those without the funds for a full deposit to step their first foot on the property ladder, as it’s a part-buy, part-rent scheme.

They are typically offered by housing associations from which you buy a share of the property. The share you can own varies from property to property, but you’ll typically begin by owning 25% to 75% of the property.

As well as paying monthly mortgage payments on the shares you own, you will pay rent on the remaining shares that you do not own.

In most cases, you’ll only need a 5% deposit – however, this can vary depending on the housing association as well as your credit history. Shared ownership schemes aren’t available to just anybody – but we’ll go into more detail about eligibility criteria in the next section.

Eligibility For Shared Ownership

Not just anybody can apply for a shared ownership mortgage – there are certain eligibility requirements that must be met beforehand. Like with any mortgage, you must be at least 18 years old to be eligible.

Your income can also determine your eligibility for shared ownership – if your income is too high, then you won’t be eligible. In London, your annual income for your household must be under £90,000 – and outside of London, your annual household income needs to be under £80,000.

This means that in order to be accepted for a shared ownership mortgage, you should not be in a position to buy a home that suits your requirements on the open market. You must also demonstrate that you are not in arrears with rent or mortgage payments.

Although most people that opt for a shared ownership mortgage are first-time buyers, you can opt for a shared ownership home if you already own a home. However, you must be in the process of selling your home, and provide evidence of this.

Like with regular mortgages, you’ll need to have a good credit history. Debts at CCJs (County Court Judgements) can impact your chances of being accepted by a shared ownership mortgage lender.

You must also be able to afford the regular payments that are involved with buying a home – including the deposit payment (which is lower than most open market properties).

The deposit amount is typically between 5% and 10% of the share you’re purchasing – but this can vary from case to case. Be sure to check the eligibility requirements with the housing association that is selling the property – as there may be additional criteria.

How To Apply For A Shared Ownership Mortgage

Applying for a mortgage can be a difficult process, which is why many people will work with a mortgage advisor to streamline the process and compare mortgage deals to find the best mortgage rates.

When applying for a shared ownership mortgage, expect to be asked about your income, your savings, and your credit history. Your mortgage advisor will go through the process with you, guiding you every step of the way.

Contact us today for a quality mortgage broker in Liverpool and the surrounding areas to give you all the guidance, support and advice you need when buying a home, whether you’re a first-time buyer in Liverpool or you’re in the process of selling your home.