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Buying a home for the first time can be an intimidating process, with a number of schemes available to help you out. Choosing the right scheme for you and your lifestyle depends on certain requirements and their suitability to your monthly budget. Understanding the pros and cons of each scheme can help with the decision. So, what are the benefits of shared ownership?
There are a number of benefits to using the ‘Shared Ownership’ scheme. You’ll be able to get on the property ladder much sooner, and your deposit will typically be lower than if you were buying outright. Monthly payments are also often lower, with rent usually lower than if you were renting privately. ‘Shared Ownership’ also allows you to buy more shares in the future, all the way up to owning 100% of your home.
Read on to find out more about the benefits of ‘Shared Ownership’ and how it can make owning a home easier.
‘Shared Ownership’ gives first-time buyers, and those who can’t afford to purchase in the current market, the opportunity to get onto the property ladder with less investment outright. Homes must be built for the purpose of the scheme, meaning only new-builds and resales will be available.
You’ll buy a share of the home based on what you can afford and pay a mortgage on this percentage. You’ll then pay rent, usually below market value, to your housing association on the remaining percentage, along with any additional fees like service charges or ground rent.
Check out our information hub below to learn more about how ‘Shared Ownership’ works.
Shared Ownership Information Hub
‘Shared Ownership’ can make the home-buying process so much easier, giving you long-term stability much sooner in life. It’s popular for first time buyers and gives those on lower incomes an opportunity to break into the market. You’ll be able to work towards full ownership, with the scheme giving you more time to save whilst living in the property.
Here’s a list of the benefits of ‘Shared Ownership’ in a bit more detail:
Instead of remaining in the rental market and risking a rise in your rent, ‘Shared Ownership’ allows you to buy a property as an owner-occupier. This can give you the stability offered by home ownership, whilst not overstretching your budget with outright payments.
Your deposit for buying a ‘Shared Ownership’ home will often be cheaper than if you were to buy a home outright. Your deposit amount will be based on the share you intend to buy, not the full value of the property. The percentage will typically be similar to that of an outright purchase, usually 5% or 10%, but your payment will be drastically lower for a ‘Shared Ownership’ property.
‘Shared Ownership’ makes mortgages much more accessible to those on lower incomes. Like the deposit, your mortgage will be based on the share you intend to buy, not the entire value of the property. Monthly payments will often be cheaper than outright mortgages, so you may be able to afford ‘Shared Ownership’ on a lower salary.
With a process called ‘staircasing’, you have the option to buy further shares in your home once you’ve saved enough. Most properties will allow you to staircase up to 100% ownership, meaning you’ll no longer have to pay rent and will only be responsible for your mortgage payments and any additional costs.
You can also sell the shares you do own at any time, giving you the option to choose other options if ‘Shared Ownership’ doesn’t work for you.
First-time buyers don’t pay Stamp Duty on the first £425,000 of any home that costs up to £625,000. Outside of this, you can pay Stamp Duty on the total value of the home, as if you were buying outright. On the other hand, you can choose to only pay Stamp Duty on the share you’re purchasing, but you’ll have to pay the remaining amount later on.
You can find out more about how much Stamp Duty you’ll pay through ‘Shared Ownership’ in our helpful blog: “Is Shared Ownership Cheaper Than Buying A Home Outright?”
Leases on ‘Shared Ownership’ properties are now a minimum of 990 / 999 years. As long as you continue to pay your rent and mortgage repayments, you can live in your property for the duration of your lease.
The award-winning team at Plumlife is on hand to help you find the perfect option for buying a home. We’ve been making the process easier for over 20 years across the North West, Yorkshire and beyond.
‘Shared Ownership’ is just one of the options available to you in your home-buying journey. We’re bound to find a property that suits you, so get in touch today!
No matter how much of the home you own, you’ll be responsible for any repairs or maintenance. Some of these costs might be included in the building warranty, especially because most homes under the scheme are newly built. Your housing association might also cover some costs if your home has an ‘initial repair period’.
You won’t be able to make your own offer on a ‘Shared Ownership’ property. They are purpose built for the scheme using government subsidies and the advertised price is based on a valuation by a RICS-certified surveyor. There is a positive side to this, however, as it means there won’t be any bidding wars and homes should be sold on a first come, first served basis.
You can sell your ‘Shared Ownership’ home at any time, but there are extra steps involved. Before it can be put up for sale, your home needs to be evaluated by a RICS chartered surveyor. You might also need to cover both your own legal fees and those of your housing association.
You can use our own service, Plumlife Move, which can help you with the resale of your shared ownership property throughout the North West of England.
If you own all of your home, you can sell it through an estate agent like any other property. If not, your housing association will usually try to find a buyer for you, making the process much easier. After eight weeks without a buyer, you’re then free to advertise on the open market as usual.
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