How first-time buyers can share ownership
FOR first-time buyers getting onto the property ladder is hard. That’s a given.
However, if you can’t quite afford the mortgage on 100 per cent of a home, there is help out there.
Help to Buy: Shared Ownership offers you the chance to buy a share, usually between 25 per cent and 75 per cent of the home’s value, depending on what you can afford.
A housing association owns the remaining share, and you pay an ‘affordable rent’ on whatever part you don’t own.
Put simply, you need a smaller mortgage to buy the property, and also a smaller deposit.
Later on, you can buy more shares as and when you can afford them – known as staircasing – and as you buy more shares, you will pay less rent. The cost of your additional shares will depend on the value of your home at the time you choose to buy them.
So if the value of your property goes up, so will the price of your shares.
Likewise, if the value of your home falls, the price of your shares will be cheaper.
Each time you want to buy another share, the housing association will value the property – and you’ll be charged the valuer’s fee.
What costs can I expect?
Typically, you’ll need to raise a deposit of at least 10 per cent of the share of the property you are buying.
You’ll also need to secure a mortgage for the remainder of that share from a bank or building society
You’ll then have to pay rent to the respective housing association on whatever share of the home you don’t own
All normal housebuying costs will still apply such as mortgage and legal fees, surveys and Stamp Duty
As Shared Ownership properties are leasehold, there will probably be annual service charges to pay to maintain common areas and grounds; you will be responsible for the maintenance and repairs on your home
The kind of property you can buy will vary according to the specific housing association.
But generally, Shared Ownership schemes can be applied to new-build and existing properties – all of which will be leasehold. »»www.helptobuy.gov. uk/shared-ownership.