Shared Ownership Buyers Guide
How do I Buy through Shared Ownership?
As a first time buyer shared ownership can be daunting so we have provided a step-by-step guide. To buy through shared ownership you will need to do what is known as 'maximise your affordability' you can check your affordability using our affordability calculators here. What this means is that you will be required to take out a mortgage in addition to any deposit you may have even if you can afford to buy the minimum share of the property in cash. The rule may be waived for people who can't get a mortgage due to age or disability. We have partnered with affordable homes and shared ownership mortgage specialists providing the best possible access to obtaining a mortgage, see here. Also see our house viewing tips section here.
Process for buying:
- Use our mortgage calculation tool / affordability calculator to see which properties may be suitable and search for properties on Housetrade - The affordability calculator and mortgage calculator assist you in determening what level of lending you may be eligible for to give you guidance on which properties are affordable to you.
- Register with local HomeBuy agent for shared ownership - In order to buy a shared ownership property you have to be eligible for the various shared ownership schemes on offer in the area you want to live. You will need to register with the HomeBuy Agent for the area you want to live in and check your eligiblity. A HomeBuy agent is government appointed housing association responsible for handling initial shared ownership enquiries in a given region.
- Obtain an Agreement in Principle, contact our shared ownership mortgage lenders here to obtain a free no obligation agreement in principle for a mortgage (usually involving a credit check) - When you have determined that you are eligible and can afford the scheme you are interested in (the housing association selling the property will be able to confirm this if a HomeBuy agent hasn’t already) you are then required to prove that you can obtain a mortgage. Use our panel of shared ownership mortgage specialists who can guide you through the application for a no obligation agreement in principle that will confirm whether you are able to gain finance to access the scheme. If accepted you will be offered an agreement in principle which usually required a credit check.
- Select which property(s) you are interested in and speak to the Housing Association who fulfil qualification and complete shared ownership affordability application - this involves eligibility questions over the phone and putting you in contact with the seller to view properties.
- When you have found a property you like and are eligible for, or the housing asociaiton contact you to formally offer a shared ownership property - you will usually then need to pay a reservation fee confirming all the property details share price etc.
- You can now submit a full mortgage application through our panel of specilist shared ownership mortgage providers - The mortgage lender you eventually decide to go with will take you through the full application process for a shared ownership mortgage right up to completion and take care of all required paperwork.
- At this point you should appoint a solicitor, our specialist panel of shared ownership solicitors are on hand - The solicitor takes care of all of the legal and other important procedural aspects of a property transaction, these activities are known as conveyancing. Our panel of specialist shared ownership solicitors have many years of experience dealing with shared ownership properties and offer very competitive rates. Ideally you should instruct any solicitor not to undertake and work for which non-refundable fees are billed until your mortgage application is under way. Ideally you should wait for non-refundable work to begin until after you have received a positive valuation from the mortgage lender.
- When your mortgage application has been submitted the lender will perform necessary checks and instruct a valuation and if this passes you will receive a formal mortgage offer - The lender will thoroughly check paperwork and ensure they are in agreement with the price you have had the home valued at. If the lender feels the valuation given is above what they value the property at you will need to speak with the housing association to see if they are prepared to negotiate. Once a valuation is passed and all paperwork has been approved the lender will provide you with a formal mortgage offer. It is at this stage where you should look to take out insurance protecting yourself and the property you wish to purchase.
- Now it is just down to the solicitors to finalise the legal steps and you are ready to move into your new shared ownership home - It is advisable to keep an eye on proceedings and keep in regular contact with your solicitor to ensure you are happy that completion is on schedule.
Why to buy through Shared Ownership?
There are lots of good reasons to buy a new home with Shared Ownership:
- First Timer Buyer friendly
- Can buy chain free
- Have a 5 year National House Builders Council (NHBC) guarantee
- Can buy a quality home you can afford in an area you want to live
Buying an existing shared ownership property available through resale can:
- Offer the chance to buy in sought after developments in high demand areas.
- Provide an opportunity to buy an older property in an established community.
- Giving first timer buyers access to older properties
Am I Eligible - Who can apply for this scheme?
As a minimum you should not be able to afford to buy a home outright. Eligibility is assessed by the shared ownership application process through the housing association and HomeBuy Agent. The housing association will be able to provide further information on their application process, whether it is a new home or a resale the application process will be the same. The local HomeBuy agents handle shared ownership applications on behalf of housing associations, so the housing association will give you a step by step guide to the application. You can find a list of HomeBuy agents here.
Whatever the scheme - all the HomeBuy options available require you to fulfil the same basic eligibility criteria. These include:
- You have a gross household income of no more than £66,000 per annum when eligible to purchase or rent a one or two bedroom home or no more than £80,000 per annum when eligible to purchase or rent a family sized home (three or more bedrooms). A Lower income threshold may apply to some developments, and please not bonuses and other sources of income will count towards your total income.
- Applicants should ideally be first time buyers, although if you are looking to buy a new home after a relationship breakdown you may also be considered
- You must be in full or part time employment or be able to demonstrate you can afford to maintain the costs of owning the home long term. Student loans, bursaries or similar funding sources are not accepted.
- Priority will be given to armed forces (MOD) employees, and social tenants
- You should ideally have either family or work connections to the area in which you want to buy
- If you wish to purchase a property in London often priority for particular properties is given to those who currently reside in the same borough as the development, property details will stipulate this.
- You should be a British or EU/EEA citizen, or have indefinite leave to remain in the UK. If you do not have indefinite leave to remain it is possible to apply by be aware that you may have difficulties in obtaining a mortgage. If unable to be approved for a mortgage you will NOT be able to proceed with the purchase.
Before purchasing you will need ensure you have:
- A good credit history, so you stand a good chance of being approved for a mortgage.
- Have the funds required for the deposit, the amount will be depedant upon the cost of the share you buy, your credit rating and your mortgage lender's requirements.
- Be able to raise around £4000, which is the average cost of buying which covers the additional costs of mortgage arrangement fees, solicitor's fees, moving costs etc.
What are the costs?
As a first time buyer you will need to understand the costs association with buying a property; be able to pay the cost of the mortgage valuation or survey and legal fees. The minimum savings you need depend on the shared ownership scheme you want to buy into. You may also need to pay the cost of moving home and connection charges for gas and electricity supplies. In most cases, buying a home involves paying a deposit.
Every month you will need to make the following payments:
- Your mortgage repayment to your mortgage lender
- Your rent
- A service charge and management fee for services you receive
- Buildings insurance
What happens when I want to sell? - See Shared Ownership Sellers Guide here
Again as the majority of people owning shared ownership properties were first time buyers when the property was purchased you need to understand your options when it comes to selling. You can sell your share of the shared ownership property at any time and an independent survey will decide what your property is worth. The property will be sold at the current market valuation. We will help you do this by looking for a possible buyer on our waiting list. This should reduce the cost of selling your share. If you wish to sell your shared ownership property, your share is marketed for sale by your housing association to allow other people in housing need to benefit from low cost home ownership. The property is resold at the market value of the property at the time of resale.