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The Shared Ownership scheme is primarily designed to help first-time buyers to enter the property market. By only acquiring an initial share in a home, buying a Shared Ownership property can be a much more affordable option than purchasing a home outright. But what do you need for a Shared Ownership deposit?
The size of the deposit you pay for a Shared Ownership property will ultimately depend on the size of the initial share you buy. Most mortgage lenders will ask for 5-10% of your initial share in the property as a deposit. So, purchasing an initial 50% share in a property worth £150,000 will require a deposit of between £3,750 – £7,500.
Keep reading to find out more about what you need for a Shared Ownership deposit.
One of the key advantages of buying a Shared Ownership property is that you are only paying for an initial share of the home. This means that you will only be required to pay for a deposit on a mortgage that covers your share, making it a far more affordable option, especially for first-time buyers.
Typically, mortgage lenders will require from 5-10% of your initial share as a deposit. Choosing to pay a larger deposit will generally open up more attractive mortgage rates which could reduce your monthly repayments.
The initial share you purchase in a Shared Ownership home will typically be between 25-75%. However, some housing associations may allow you to purchase a 10% share which would reduce the size of the deposit you would pay to the mortgage lender.
Find out more about the cost of Shared Ownership by reading our detailed blog: Is Shared Ownership Cheaper Than Buying A Home Outright?
Paying for the deposit on a Shared Ownership home will undoubtedly be the largest cost that is required on your journey to home ownership. It is therefore vital that before you get started, take the time to put together a realistic plan for saving the money you will need. There are a number of options that can help you to save the money for a deposit, such as:
It is fairly common for homebuyers to receive gifts from friends and family to cover the cost of the deposit on a house. While most mortgage lenders will accept these financial gifts when arranging a mortgage, the gifter will be required to:
It is important to let the gifter know that they will be required to provide this information before they transfer the money to you so that there is no delay in purchasing your new home.
When purchasing a Shared Ownership home, a deposit will generally be required in exchange of contracts. It is therefore important to have your deposit secured and readily available so that there is no delay to your purchase. For some newly built homes, you may be required to exchange contracts within 28 days of agreeing to purchase. Your solicitor will typically request your deposit in advance of contracts being exchanged.
At Plumlife Homes, we are proud to offer an outstanding range of properties available for purchase through the Shared Ownership scheme. To find out more about the scheme and to start the process, view our available properties below or contact our friendly team.
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