The Shared Ownership Scheme is a government-backed mortgage initiative in the UK designed to help individuals in stepping onto the property ladder. It is open to permanent UK residents who are either first time buyers or former homeowners facing challenges in purchasing a new home.
To be eligible for the scheme, your household income should not exceed £80,000 and the property you intend to purchase is typically a leasehold property, which means you will have ownership for a specified period of time.
Through the Shared Ownership Scheme, you have the opportunity to buy a portion of the property (usually between 25-75%) using a mortgage, while the remaining portion is paid as rent.
The rent, which may include service charges and ground rent, is generally set at a lower rate compared to market value and is paid to a housing association.
The Shared Ownership Scheme underwent significant changes starting from April 2021 as part of the government’s Affordable Homes Programme. These updates brought about important modifications to how the scheme operates.
Previously, the minimum property share purchase was set at 25%. However, under the new rules, it is now possible to purchase a minimum share of 10% in certain cases. Furthermore, the process of buying additional shares has been adjusted.
Instead of the previous requirement of purchasing shares in 5-10% increments, you can now acquire shares in 1% instalments. Another noteworthy change is the reduction in fees associated with buying additional shares. Additionally, the responsibility for maintenance and repair costs has shifted.
In the first 10 years of ownership, these costs will be covered by the landlord, relieving the shared owner of these financial obligations.
If you obtained a Shared Ownership Mortgage in Middlesbrough before the specified time period, these updated rules may apply to you moving forward. It is always advisable to consult with your provider to confirm the specifics, as the application of these changes can vary on a case-by-case basis.
Before diving into the mortgage aspect of the process, it’s essential to determine your eligibility for the Shared Ownership Scheme. To do this, reach out to your local Help to Buy agent in the desired area of purchase.
During your conversation with the agent, you’ll typically be asked for specific information, including your income, available budget, preferred location, and credit history. Once your eligibility is confirmed, you can proceed with applying for your mortgage.
When it comes to this step, it’s advisable to consult with a mortgage broker in Middlesbrough. Not all mortgage lenders offer loans for individuals utilising the Shared Ownership Scheme, and a mortgage broker in Middlesbrough can help you navigate the available options.
The amount you can borrow will generally depend on factors such as your income and other fees involved, such as rent.
Naturally, there are advantages and disadvantages to having a Shared Ownership Mortgage in Middlesbrough. It’s important to consider that not all mortgage lenders offer loans to applicants utilizing the Shared Ownership Scheme.
There are still numerous lenders, including those on our panel, who do provide mortgages for this scheme. Furthermore, Shared Ownership Mortgages in Middlesbrough offer long-term stability, as you become both an owner and occupier simultaneously.
One of the concerns for many homebuyers is the deposit, as saving for it can be challenging. Fortunately, deposits for Shared Ownership Mortgages in Middlesbrough are typically lower compared to open market purchases.
These types of mortgages also make homeownership more accessible for individuals with lower incomes.
While these benefits are significant, it’s important to note that you’ll be responsible for 100% of the ground rent and service charges on your property, regardless of the share you’ve purchased.
You can participate in “staircasing,” which allows you to buy additional shares over time until you reach 100%. Once you’ve reached this point, you’ll no longer have to pay rent, but your mortgage, ground rent, and service charges will still apply.
It’s worth mentioning that when your owned share exceeds 80%, you’ll be liable for Stamp Duty on the entire property value. In some cases, however, this land tax may not apply to first-time purchases.
Despite the potential costs of Stamp Duty, your monthly mortgage payments can still be more affordable than a conventional mortgage and even cheaper than private renting.
Speaking of tenure, Shared Ownership Mortgages provide security unlike private rentals. As long as you meet your monthly mortgage obligations, you’ll be able to stay in your home for the duration of your lease, typically ranging from 99 to 125 years.
As your home is partially owned by someone else, you’ll need to obtain permission from the relevant housing provider before making any structural changes. This may limit the sense of freedom you would have if you owned the property outright.
When it comes to selling your home with a Shared Ownership Mortgage in Middlesbrough, there are a few differences compared to other mortgage types.
While selling a property with a conventional mortgage is typically straightforward after the fixed period ends, there are some additional considerations with Shared Ownership.
The ability to sell your home with a Shared Ownership Mortgage in Middlesbrough depends on the percentage of the property you own in shares. In most cases, you’ll need to own 100% of the property before you can proceed with selling.
It’s important to be aware that the housing association generally holds “first refusal” rights for the first 21 years after you purchased the home. This means they have the legal right to make an offer to purchase the property themselves before you put it on the open market.
If you don’t currently own 100% of the property, you’ll need to explore purchasing the remaining shares in order to have the option to sell it.
A Shared Ownership Mortgage in Middlesbrough is a great option for first time buyers in Middlesbrough who have a smaller deposit but dream of owning a home. This mortgage scheme can help you achieve your homeownership goals and get onto the property ladder.
It’s important to acknowledge that navigating a Shared Ownership Mortgage in Middlesbrough can be a complex journey, especially when considering the various fees involved. It’s crucial to be fully prepared and informed about the contract details before proceeding.
Ultimately, the decision comes down to personal preference. To ensure you’re well-prepared and have a clear understanding of your options, it’s recommended to book a free mortgage appointment with a trusted mortgage broker in Middlesbrough.
They will provide guidance and help you in preparing for this process. For further information on Shared Ownership Mortgages in Middlesbrough, you can visit the government’s OwnYourHome website.
It’s crucial to any first time buyers in Middlesbrough when applying for a mortgage. Having a high credit score is a helpful factor. It ideally means a higher chance of you getting accepted and being successful with your application.
Although this doesn’t mean you’ll be guaranteed acceptance, though, each lender has their internal scoring systems.
Each lender has their criteria that they have developed over the years. Suppose you’ve failed with one lender not to worry. Mortgage lenders may be inclined to be more lenient, and it is down to your Mortgage Advisor in Middlesbrough to match you with the lender that’s right for you.
There are multiple credit reference agencies in the UK; we recommend Experian and Equifax. It is a good idea to look into many of these agencies as possible in advance, to give you a more specific idea of your credit score.
Furthermore, it is also plausible that some of these agencies hold inaccurate information. So, by checking with multiple agencies, you can be sure that this information gets appropriately amended.
Multiple credit searches can have adverse effects on your credit score. Be on guard of using price comparison websites which are known to be significant credit culprits searching on individuals.
If you are applying for a mortgage soon, it may be wise to apply for additional credit afterward. Whilst having some credit and paying it back is a good thing for your score in the long run.
Lenders prefer to see you leverage your borrowings right before setting up a mortgage application.
Making sure you’re registered on the electoral roll increases your credit score. It indicates stability which lenders like. Ensure your name gets spelt correctly and that it’s your current address which is registered online.
If you aren’t registered, it’s simple and easy enough to do this online.
If you max out your card each month, your credit score will get lowered. Utilizing a credit card to keep on top of your payments each month is a preferred method. It’s a good indicator of your lender that you are good at managing your money.
The main red flag in a lender’s eyes is if you exceed an agreed card limit or overdraft. The reason lenders watch over this is because they want to know you’re able to take your finances responsibly.
Sometimes it can get perceived on your credit report that you are living in two places at the same time if providers have yet to get told that you have moved houses.
It is pivotal that the addresses which you’re updating get spelled correctly; If you have been residing in a flat, this can be a bit more complex as the address can get formatted in different ways.
If you no longer use individual store/credit cards, you should get into contact with the providers to close the account for extra security. In the short term.
This could get seen as having a brief impact on your score as the lender can’t tell who’s closing the account, e.g. you or the provider, but this will be for the better and an advantage to you in the long run.
It’s a great thing to do to reduce your chance of becoming a victim of fraud if you don’t notice you have a lost a card which you may use regularly.
Many consumers feel that credit scoring is an unfair way of applications getting assessed through lenders themselves are indifferent to this idea as it makes their overall job more manageable.
It is more cost-efficient for them to operate this way and computers give more consistent outcomes. On the other hand, some lenders do still do it the old-fashioned way but still apply the same rules about the number of defaults and CCJ’s they will allow.
When setting up your application, be sure your report is up to date to increase your chances of being accepted the first time. The more in-depth information which your specialist mortgage advisor in Middlesbrough has at hand, the better.
The happy days of 100% and even 125% mortgages seem a long time ago. Now the credit crunch is behind us, and lenders tend to be more confident again to offer 95% mortgages to first time buyers in Middlesbrough.
It’s reasonable that you should show you can save each month. It also gives lenders comfort that you have something to invest in the process showing you have something to lose should it start to become more challenging to keep up your mortgage repayments.
We know it’s challenging to save up a deposit for many people, and this is their primary barrier to entry into the property market. It is daunting if you have a family or are in rented accommodation.
The higher the deposit the lower interest rate you will receive and this usually is more cost-effective and helps you in the long-term. The reasons for this is that you appear more reliable to them. Bands differ in price depending on various factors such as your deposit.
The percentage of your mortgage provides lenders with an idea of how invested you are to your mortgage, although considering – the higher the interest rate, the more expensive. This means that the higher your deposit, the more secure you will be when it comes to purchasing your dream home meaning you will be happier in the long term.
In a limited number of circumstances, it can be successfully achieved. The Lender will make the monthly payment as an additional credit commitment, therefore, grant you a smaller mortgage.
As a result, one will qualify if you hadn’t borrowed the deposit. Most lenders oppose this as you are essentially borrowing 100% of the purchase price.
Yes, most accept gifted deposits from family members and friends can be acceptable too. The sender of the gift will need to confirm it’s a gift, rather than a loan, and need to produce ID and proof of funds for anti-money laundering purposes.
Others have turned to the Bank of Mum and Dad, gifting their children funds towards a deposit.
For Anti-Money Laundering purposes, providing bank statements help to evidence funds. Lenders like to see how the money is being built up as this provides more of genuine insight.
If you have deposited a large amount into your account, you may need evidence to support this.
For example, if you have sold a car, then you’ll need a receipt and the amount you have sold the asset for would match the amount paid into your bank account. This will highlight reliable sources backing up your finances.
If you are selling a property, then the Memorandum of Sale provided by the Estate Agent is your proof.
Usually. If it is a genuine discounted purchase, i.e. the house is worth £100,000, and you have been offered it, for example £90,000, then some Lenders will accept this as your guaranteed deposit.
This works well if you are eligible for a Right to Buy from the Local Authority or other Social Landlord, our mortgage advisors in Middlesbrough can help you find the most suitable right to buy mortgage in Middlesbrough.