Debunking myths around Shared Ownership mortgages

In a world where buying a home outright is more difficult than ever, Shared Ownership is a great way to own your home without breaking the bank. However, there are still a lot of misconceptions about Shared Ownership mortgages and what they entail.

Are you struggling to separate fact from fiction? We’re setting the record straight with a guide to Shared Ownership mortgages:

Myth #1: Shared Ownership involves sharing your home with someone else

Shared Ownership might sound like you are sharing your property with someone else, but this is far from the case. Instead, the ‘share’ in Shared Ownership comes from the fact that you buy a smaller share of your home (usually between 25-75%), while paying rent to the housing provider on the portion that you don’t own. This means that you’ll get to enjoy the feeling of being a homeowner, without having to share your space with a random stranger.

Myth #2: You can’t ever own your Shared Ownership home.

You might start by buying just a share of your home, but Shared Ownership also gives you the option to own more of your home in the future. You can buy more shares of your property through ‘staircasing‘, which also reduces the cost of rent in the process. Over time and depending on how much you save, it should be possible to staircase to 100% ownership of your home in most cases.

In the meantime, you’ll still get to enjoy all of the benefits of being a regular home-buyer. That means having the option to customize your home and even sell your share should the time come.

Myth #3: Are Shared Ownership mortgages just for first time buyers?

Okay, so Shared Ownership is primarily directed at people who can’t afford to buy their first property. But this doesn’t entirely rule out people who have bought a home before! As long as you meet the eligibility criteria, have a household income of less than £80,000 (or £90,000 in London), and don’t already own a home, you are more than welcome to apply for a co ownership mortgage.

Myth #4: Shared ownership mortgages are more expensive than traditional mortgages

Given that you pay for your deposit and monthly rent payments, it’s easy to assume that part ownership mortgages would work out more than traditional mortgages. However, this ultimately depends on the share and the value of the property you buy. In most cases, your monthly mortgage repayments will work out to be less than the cost of a traditional mortgage. This is because you only need to get a mortgage for a portion of the property’s value, resulting in lower monthly repayments!

Myth #5: You can’t make any changes to your property with a Shared Ownership mortgage

You might think that owning a share of your home prevents you from making any changes to your property but if you have dreams of redesigning your home, Shared Ownership won’t put an end to them.

As the co-owner of your property, you’ll enjoy the freedom to spruce up your home to your liking, whether you want to hang up some fancy wall art or repaint the walls. If you want to make more significant home improvements, you may have to check the terms of your lease agreement.

Myth #6: Shared Ownership mortgages are only available for new build flats

While most Shared Ownership homes are new build flats, the scheme gives you access to all kinds of properties. If you fancy a more classic period home, many housing providers have resale properties for you to choose from. The type of homes available will depend on the area and the housing provider you are buying with, so make sure you consider all of your options. Who knows, you could end up finding a spacious home fit for a family!

Myth #7: You can’t sell a Shared Ownership home

One of the biggest myths surrounding Shared Ownership is that it’s impossible to sell your property. But while you do need to find a buyer that is eligible for the scheme, selling your Shared Ownership home is a lot more simple than you’d think!

In the first instance, your housing provider will take the reins in helping to find a buyer for your home. After a set period of time, you will then have the opportunity to sell the home yourself privately or with the help of an estate agent of your choice. And if you’ve bought 100% of the property, you’ll even have the option to sell on the open market!

Want to find out even more about Shared Ownership mortgages and where to find them? Share to Buy has all of the information you need, whether you want to learn more about Shared Ownership affordability, or to get to the bottom of the staircasing process.

You can also start your house hunting on our property portal, where you can use key filters like location, number of bedrooms and deposit amount to find your dream home.