What is a 100% shared ownership mortgage ?
As UK house prices have escalated out of the reach of the first time buyer many people have had
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to resort to moving into rented accommodation to get a roof over their heads. An Englishman's home is his castle and with the average UK mortgage now being in excess of £100,000, it is now an extremely expensive commodity and the dream of owning your home is looking bleak for the first time buyer.
Let us look at some alternatives that could be considered: -
* Shared ownership
* Parent guarantee schemes
* Buying with friends
* Shared equity schemes
Shared Ownership
If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments.
A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where ( life insurance ) possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings.
As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you ( remortgages ) pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable.