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Error: Yearly income income must be between £1 and £10,000,000.
Error: Regular bonus must be between £1 and £10,000,000.
Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Shared Ownership Mortgages
Benefits of shared ownership mortgages
One of the key benefits to shared ownership is the option of investing in a proportion of a property if you are unable to afford to buy a home elsewhere. The scheme offers lower mortgage payments, whereby the owner partially owns the property and rents the remaining share. It is important to understand that rent remains payable on the percentage of the property owned by the housing association, and this needs to be paid alongside the shared ownership mortgage repayments. Over time, the scheme allows homeowners the option of purchasing the residual proportion of the property from the association, and thus complete whole ownership.
How shared ownership mortgages work
The main difference between typical residential mortgages is that the deposit requirements are lower. This makes it more accessible to more people who do not have the minimum deposit available to invest in other purchase options. Through shared ownership mortgages, you only need to have the deposit available for the proportion of the property that you are purchasing. For example, a traditional mortgage on a £200,000 property would be around 10%, or £20,000. If you are buying 50% of the same value property through a shared ownership mortgage, you need to have 10% of that 50% value available; i.e. £10,000.
Criteria for shared ownership mortgages
As with any mortgage product, lenders have criteria that applicants need to adhere to apply.
- Maximum income bands
- Being a first-time buyer or not being able to afford a property through a traditional mortgage
- Renting from a housing association or local council
- Being a resident in the property
- Not sub-letting the property or any part of it
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Selling a home with a shared ownership mortgages
It is crucial to understand that if you have a shared ownership mortgage, you do not own the entirety of the property. This means that if you wish to move and sell the property, your housing association has the first right of refusal for 21 years after you have made the purchase. They can, therefore, choose to find their own buyer, rather than your being able to sell your home on the open market. Over time, there is the potential to purchase a larger proportion, or all of, your home from the association. The timing of this process will depend on your circumstances and at which stage you are financially able to commit to purchasing a larger share of the property.
Key factors in shared ownership mortgages
As with any property, the value of your home will change with the property market. This means that the price you will have to pay to buy a larger percentage of your property may increase or decrease depending on the current market value at the time. The system is not the same as owning a property with friends or family members, so you need to understand your rights and obligations as a co-owner before deciding to proceed with a shared ownership mortgage.
Interest rates on shared ownership mortgages
Eligible applicants will find that different lenders offer different rates. These are usually somewhat different to standard mortgage rates, so obtaining a specific quote or offer for a shared ownership mortgage is important, as this will not be priced at any standard published rates. Factors that impact the interest rate you will be offered include the deposit you have available, what proportion of the property you wish to buy, and how affordable the mortgage is for you alongside the rental payments for the balance of the property.
Finding a shared ownership mortgage
Shared ownership is a scheme which has helped thousands of applicants get onto the property ladder, and secure affordable lending to help them purchase their own home. Not all lenders offer shared ownership mortgages, so it is important to make sure you have selected a lender who offers this type of mortgage product before proceeding with any applications. The first step of applying is to ensure you meet the criteria, and loan broker are specialists in the field. Give us a call and we will be happy to help you understand the process, identify whether you are eligible, and find the right lenders for you.
Shared ownership mortgages allow you to purchase a percentage of a property. The remaining share in the property is owned by the housing association, and you pay rent on the balance that they own. One of the benefits to shared ownership is a reduced deposit requirement, and that buyers without the budget to purchase their home are able to do so in smaller stages.
It is vital to understand that you own a proportion of the property, and that the association owns the rest. This means that you need to know what rent you will pay in the balance, and be prepared to enter into an ownership shared with the housing association. Shared ownership schemes are particular to different types of property and area, so if you need help finding a shared ownership lender in your region, give us a call and we can help! If you plan to purchase a further share in your property later on, you need to understand that this will be valued at market value at the point of purchase. Potentially, therefore, you will pay more for a further percentage if the property has increased in value in the meantime.
Finding a lender who understands and offers shared ownership mortgages is best done through a broker such as Revolution Finance Brokers. Get in touch with our expert mortgage team who will be able to find the right scheme for you.
The interest charged on shared ownership mortgages is not fixed, and will therefore vary between lenders. What offer you receive will depend on the proportion of the property you are buying and what deposit you have available as well as other factors such as the term of the mortgage. Make sure you know the monthly repayments and the additional rental payments required before accepting a mortgage offer, as you need to be able to afford to keep up with both payments before going ahead.
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Brokers couldn't be easier:
As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.