The financial adviser you deal with may also offer to arrange a mortgage for you. You don't have to use their services, though, and are free to arrange a mortgage yourself. These costs are unavoidable with shared ownership, and could drag down the amount you could borrow if your monthly income is stretched.
The market for shared ownership mortgages is not as big as that for all first-time buyers — but there's still plenty of choice, with most high-street lenders and some smaller building societies offering shared ownership products.
Some lenders offer mortgages specifically designed for shared ownership. These tend to be smaller, regional building societies, which are often willing to lend at high loan-to-values - useful if you have a smaller deposit.
Big high-street lenders more commonly offer their first-time buyer mortgage range to shared ownership buyers. If you have bad credit issues — such as county court judgments CCJs or debt arrears — you may struggle to find a lender willing to give you a shared ownership mortgage.
Our analysis of the entire mortgage market found just three lenders willing to offer shared ownership mortgages to people who have had credit problems in the past. Before committing to buy a shared ownership property you should check through the lease with a fine-tooth comb for any unusual or punitive clauses.
As a guide, many lenders will only approve a mortgage if the annual ground rent on a leasehold property is no more than 0. Shop around and look at comparable properties to ensure that the terms of the lease are competitive compared with the rest of the market.
Whatever the covenant, it's important to be aware of them early on. If you're considering buying a shared ownership property be sure to ask the selling agent if they're aware of any restrictive covenants attached to it. Also, always ensure your conveyancer checks the terms of the lease early on in the process so you can send these onto your lender in good time where possible.
Talking to an independent mortgage broker early on in the process of buying a shared ownership property is often invaluable. Their knowledge and experience could help you avoid properties with onerous lease clauses, and they'll also be able to give you an accurate idea of how much you could borrow. It is possible to buy a greater share of your property at any time from the housing association - this is called 'staircasing'.
The cost of increasing your share will depend on the market value of the property at the time. To staircase, you'll need to pay for the housing association to carry out a valuation of the property and make sure you have the cash or mortgage finance in place to pay for the extra share.
Many housing associations will only let you staircase up to three times. For this reason, it's worth being strategic and working out a long-term plan before you begin staircasing.
A review has been launched, but this change is unlikely to come into force until at least Shared ownership can be a great way of getting onto the property ladder, but it's not the ideal solution for everyone.
Here are some of the pros and cons:. You can't buy any property you want under the shared ownership scheme. Only properties that have been specifically built for shared ownership can be bought this way. These are properties that have had a government subsidy and been built by a housing association. They are usually part of an estate, like an apartment block, in which a proportion have to be sold as affordable housing , or the entire estate is sold under the shared ownership scheme.
Shared ownership properties are leasehold , meaning you will only be the official owner for a fixed period of time, typically 99 years though you should be able to extend the lease as time goes on.
You'll also have to pay a service charge for the property, usually on a monthly basis. They will either be new-builds or resales of older shared ownership properties that have already been owned by someone else.
There are pros and cons to both: while you may be purchasing a brand-new property with a new-build, the price and rent tend to be higher. You may also encounter snagging issues. With a resale property, while you might save on rent, you may have to fork out to fund renovations.
You'll also have to purchase at least the same size of share that the current owner has. Whether you choose to pay stamp duty on just your share or the full property value up front is a personal decision. The obvious advantage of only paying it on your share is the smaller initial outlay you'll face, but if you buy additional shares later on and the value of the property has increased, your stamp duty bill will be higher too.
Non-necessary Non-necessary. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website. You will also have to pay your share of costs associated with maintaining the wider estate such as litter picking and gardening costs.
You will not contribute to costs associated with any service internal to a block of flats. Shared owners also have to pay for buildings insurance and a management fee in addition to the service charge. Your service charge may also include a contribution to a reserve or sinking fund The Fund which is an account maintained to collect money in advance of major or cyclical works being required. This could be for things like replacing a shared roof or a new door entry system as well as any redecoration to communal areas.
The fund is collected to reduce the risk of shared owners receiving a large bill when works are carried out. The Service Charge should be fair and accountable. At the start of a year, usually in February, you will receive an estimated service charge which you will pay from April. At the end of a financial year, usually in September, you will receive a full account which compares the estimated charge to the actual charges. You will receive a refund of the actual costs were lower than the estimated, or an additional bill if they were higher.
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