What is a shared ownership mortgage?

Shared ownership is where you buy a proportion of a property from a local authority or housing association – usually with the assistance of a mortgage – and rent the remaining part.

Normally you start off with buying 25% to 50% of the property, increasing to 75% or even 100% (if the housing association allows it) over time. This process, of buying a small amount of your property and then buying another stake later, is sometimes referred to as 'staircasing'.

The combined mortgage payment and rent of a shared ownership property should be less than the mortgage payment you may have faced had you secured a mortgage on the whole property (less your deposit). Therefore, this type of mortgage is suitable for those on lower income and are unable to get onto the housing ladder in the usual way.

Another advantage of shared ownership is that you don't have to provide so much of a deposit, which is why this type of scheme is popular with first-time buyers.

You only need to put up a percentage (normally 10% to 20%) of the stake in the property you are taking. So, if you were taking a 50% stake in a property worth £150,000, for instance, a 10% deposit represents £7,500, as opposed to the £15,000 if you were to buy the property outright with the help of a 90% LTV mortgage.

However, not all mortgage lenders allow shared ownership mortgages. Where they are offered, most lenders will generally let you choose from their full product range, although some may have products specifically for shared ownership.

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

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