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First Time Buyer
Shared Ownership Schemes
How does it work?
Shared ownership schemes have become very popular in recent years, because they have been designed to allow people who might not have the funds for a traditional mortgage to get a foot on the property ladder.
The main benefit of a shared ownership scheme is that you only need to raise a deposit on the share that you are buying and you also only need to pay stamp duty on the share you are buying. You have the option to pay a higher or even the full amount of stamp duty on 100% of the value if you choose to. So, for instance, if the property was valued at £100,000 and you were buying half of it, at £50,000, then a 5% deposit would be £2,500, rather than £5,000 if it was not a shared ownership.
The percentage share is usually set by the land owner or the housing association. There will also be a staircasing agreement in place that will allow you to purchase the additional share of the property fairly.
Buyers only need a mortgage for the percentage that you are buying: in the above example, 50%. The other 50% would be paid through rent to the housing association, who own the rest, but this rent is subsidised so that it is affordable. You can staircase the amount you own, over time, usually in increments of 10%.
Household income thresholds for shared-ownership
The scheme is designed to be inclusive, and therefore you can earn a reasonable household income and still be eligible. With most housing associations, there is and earnings cap of £90,000 combined income. This scheme is particularly attractive for first time buyers, many of who have had to rent properties as they cannot afford to buy, and therefore do not have enough money to save for a deposit to get a conventional mortgage.
Shared ownership property and stamp duty
There is also good news regarding stamp duty. You have two options with this: the first is that you can make a one-off payment. This gives the most flexibility, because it means that any stamp duty on your share of the purchase is payable, but the rest is only due when you own over 80% of the property. The other option is to stamp duty in instalments, based on how much of the property that you own.
New Builds and Resale
Another great attraction to shared ownership schemes are that you have the option of either purchasing a new property or a resale property. New build properties might have additional charges and criteria that your mortgage professional can help you with.
Shared ownership schemes have become very popular in recent years, because they have been designed to allow people who might not have the funds for a traditional mortgage to get a foot on the property ladder.
The main benefit of a shared ownership scheme is that you only need to raise a deposit on the share that you are buying and you also only need to pay stamp duty on the share you are buying. You have the option to pay a higher or even the full amount of stamp duty on 100% of the value if you choose to. So, for instance, if the property was valued at £100,000 and you were buying half of it, at £50,000, then a 5% deposit would be £2,500, rather than £5,000 if it was not a shared ownership.
The percentage share is usually set by the land owner or the housing association. There will also be a staircasing agreement in place that will allow you to purchase the additional share of the property fairly.
Buyers only need a mortgage for the percentage that you are buying: in the above example, 50%. The other 50% would be paid through rent to the housing association, who own the rest, but this rent is subsidised so that it is affordable. You can staircase the amount you own, over time, usually in increments of 10%.
Household income thresholds for shared-ownership
The scheme is designed to be inclusive, and therefore you can earn a reasonable household income and still be eligible. With most housing associations, there is and earnings cap of £90,000 combined income. This scheme is particularly attractive for first time buyers, many of who have had to rent properties as they cannot afford to buy, and therefore do not have enough money to save for a deposit to get a conventional mortgage.
Shared ownership property and stamp duty
There is also good news regarding stamp duty. You have two options with this: the first is that you can make a one-off payment. This gives the most flexibility, because it means that any stamp duty on your share of the purchase is payable, but the rest is only due when you own over 80% of the property. The other option is to stamp duty in instalments, based on how much of the property that you own.
New Builds and Resale
Another great attraction to shared ownership schemes are that you have the option of either purchasing a new property or a resale property. New build properties might have additional charges and criteria that your mortgage professional can help you with.