shared ownership mortgage

What is a Shared Ownership Mortgage? | Path to Homeownership

If you’re a UK first-time buyer looking for a more achievable path to homeownership, a shared ownership mortgage could be the solution you’ve been searching for.

What is a Shared Ownership Mortgage?

A shared ownership mortgage is a homeownership scheme that provides a more accessible route for UK first-time buyers. This scheme, also known as part-buy part-rent, allows individuals to purchase a share (typically between 25% and 75%) of a property and pay rent on the remaining share.

For many UK first-time buyers, the dream of owning a home can seem out of reach due to high deposit and mortgage requirements. However, with a shared ownership mortgage, individuals can take that all-important first step onto the property ladder.

By purchasing a share of a property, buyers can secure a home that meets their needs without having to come up with the full deposit and mortgage payments. This scheme offers a lifeline for those who struggle to save a significant amount for a deposit or simply cannot afford the ongoing costs associated with buying a home outright.

How Does Shared Ownership Work?

In a shared ownership mortgage, individuals have the opportunity to buy a share of a property. This share typically ranges between 10% and 75% of the property’s value. The remaining share is then owned by the landlord or housing association. This scheme provides an accessible pathway to homeownership for individuals who may not be able to afford a property outright.

To buy a share of a property, individuals can use their savings or acquire a shared ownership mortgage. In addition to the share, a deposit of 5-10% of the share’s value is usually required. This deposit allows the individual to secure their ownership and demonstrates their commitment to the property.

As a shared owner, individuals become responsible for paying rent on the remaining share of the property to the landlord or housing association. Rent payments are made monthly and provide individuals with the opportunity to live in their home while building equity through part-ownership.

In addition to rent payments, shared owners may also be responsible for monthly ground rent and service charges. Ground rent is a fee payable to the landlord for use of the land on which the property is built. Service charges cover the maintenance and management of communal areas and shared facilities.

Types of Properties Available for Shared Ownership

Shared ownership schemes are available for new-build properties, existing homes through a shared ownership resale scheme, and properties that meet specific needs, such as ground floor flats for individuals with long-term disabilities. This wide range of available properties allows individuals to choose a home that suits their preferences and requirements.

shared ownership mortgage

Who Can Apply for a Shared Ownership Mortgage?

To be eligible for a shared ownership mortgage, individuals must meet certain criteria. This scheme is particularly advantageous for first-time buyers or individuals who used to own a home but cannot afford to purchase a new one outright. One of the key eligibility criteria is having an income below a specified threshold, which is usually set at £80,000 (or £90,000 in London). This income threshold ensures that the scheme remains accessible to those who are unable to save for a deposit or afford the monthly mortgage payments for a suitable home.

In addition to the income requirement, housing associations may also consider an applicant’s connection to the area where they intend to buy a property. This requirement helps to ensure that individuals have a genuine need and connection to the local community, fostering a sense of belonging and stability.

Eligibility Criteria for Shared Ownership Mortgages:

  • Be a first-time buyer or an individual who used to own a home but cannot afford a new one
  • Have an income below the specified threshold (usually £80,000 or £90,000 in London)
  • Be unable to save for a deposit or afford monthly mortgage payments for a suitable home
  • Some housing associations may require a connection to the area

Income Threshold for Shared Ownership Mortgages:

The income threshold for shared ownership mortgages is set to ensure that the scheme is accessible to individuals who may otherwise struggle to enter the property market. By limiting eligibility based on income, the scheme aims to provide an opportunity for first-time buyers and those with lower incomes to achieve their homeownership goals.

Location Income Threshold
Outside London £80,000
London £90,000

Meeting the eligibility criteria for a shared ownership mortgage opens up opportunities for individuals to take that crucial step towards homeownership. By providing a more affordable path to property ownership, shared ownership mortgages empower first-time buyers and those with limited resources to secure a home of their own.

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Benefits of a Shared Ownership Mortgage

Shared ownership mortgages offer several benefits to buyers. Firstly, they provide a more achievable path to homeownership, as the required mortgage and deposit are smaller compared to full ownership. With a shared ownership mortgage, individuals have the opportunity to enter the property market with a smaller deposit, making it easier to get a foot on the property ladder.

Furthermore, shared ownership allows buyers to experience the benefits of growing equity. As they gradually increase their share of the property over time, they also benefit from any appreciation in the property’s value. This means that their equity grows, providing an opportunity to build wealth for the future.

This growing equity can be a stepping stone to full homeownership. Once individuals have built up enough equity, they may have the option to staircase – buying additional shares in the property until they eventually own it outright. This flexibility allows buyers to gradually increase their ownership as their financial circumstances improve, leading to full homeownership down the line.

shared ownership mortgage benefits

Comparing Shared Ownership to Full Ownership

Aspect Shared Ownership Full Ownership
Deposit Smaller deposit required Typically a larger deposit is necessary
Monthly Payments Rent payments and mortgage payments on the share owned Mortgage payments for the full property
Equity Growth Growing equity as the share owned increases in value Growing equity as the property’s value increases
Flexibility Opportunity to staircase and increase ownership Complete ownership from the start

As shown in the table above, shared ownership offers a more accessible and flexible path to homeownership. It allows individuals to start building equity with a smaller deposit and take advantage of the potential appreciation in the property’s value. By carefully considering the benefits and their own financial situation, buyers can make an informed decision about whether shared ownership is the right path for them.

Application Process and Lender Requirements for Shared Ownership Mortgages

Applying for a shared ownership mortgage involves several steps and considerations. To begin the process, individuals must first meet the eligibility criteria discussed earlier, including being a first-time buyer or someone who used to own a home but cannot afford to buy a new one. They must also have an income below the specified threshold and be unable to save for a deposit or afford monthly mortgage payments for a suitable home.

Once eligibility is confirmed, the next step is to undergo a thorough affordability assessment. This assessment aims to determine the share of the property that can be afforded by the applicant. It takes into account factors such as income, monthly expenses, and any other financial commitments.

During the application process, it is crucial for individuals to research and consider different mortgage options. Not all lenders offer shared ownership mortgages, so finding a lender who specializes in this type of financing is important. Lenders may have specific requirements and affordability assessments to ensure borrowers can meet the mortgage payments and fulfill their financial obligations.

When it comes to deposit options, individuals typically need to provide a deposit ranging from 5% to 10% of the share being purchased. This deposit can be funded through savings or other financial resources. It’s important to note that the larger the deposit, the more favorable the mortgage terms and interest rates may be.

Overall, navigating the application process for a shared ownership mortgage requires careful consideration of lender requirements, affordability assessments, and deposit options. By understanding these factors and working with a knowledgeable lender, individuals can successfully secure a shared ownership mortgage and take a step closer to achieving their homeownership goals.

Government Schemes and Assistance for Shared Ownership Mortgages

The government provides a range of schemes and assistance to support individuals in their pursuit of shared ownership mortgages. These initiatives are designed to promote affordable housing finance, cater to first-time buyers, and offer government-backed homebuying programs.

Affordable Housing Finance

One of the key government schemes in the shared ownership mortgage sector is the Affordable Housing Finance initiative. This program aims to make housing more accessible for individuals with modest incomes by providing financial support, such as lower interest rates or reduced down payment requirements.

First-time Buyer Scheme

The government understands the challenges faced by first-time buyers in entering the property market. To alleviate these difficulties, they have established a first-time buyer scheme specifically tailored to help individuals take their first steps towards homeownership through shared ownership. This scheme provides additional financial assistance, guidance, and eligibility criteria suited to the needs of first-time buyers.

Government-backed Homebuying Programs

In addition to the specific initiatives mentioned above, the government offers comprehensive homebuying programs that include shared ownership options. These programs come with the backing and support of the government, offering reliable and secure pathways to shared ownership. These schemes provide peace of mind to individuals by ensuring that their investment is protected and safeguarded through government-approved processes.

By taking advantage of these government schemes and assistance, individuals interested in shared ownership mortgages can benefit from tailored financial support, lower interest rates, reduced down payments, and the knowledge that their homeownership journey is backed by the government.


Shared ownership mortgages provide a viable solution for UK first-time buyers seeking a more accessible path to homeownership. With the opportunity to buy a share of a property and pay rent on the remaining share, individuals can overcome the hurdle of a large deposit. The advantages of shared ownership include a smaller initial deposit and the potential for growing equity as the property increases in value.

However, it’s crucial to consider the full picture before committing to a shared ownership mortgage. Rent payments and potential limitations on sub-letting are important factors to weigh against the benefits. Thorough research and understanding the pros and cons is essential.

For those exploring shared ownership, utilizing tools like shared ownership mortgage calculators can provide valuable insights into the financial aspects of this homeownership scheme. These calculators offer a convenient way to assess monthly mortgage payments, deposit requirements, and potential affordability.


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