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.

Updates to The Shared Ownership Mortgage Scheme

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.

How do I apply for a Shared Ownership Mortgage in Middlesbrough?

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 an 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.

Pros & Cons of Shared Ownership Mortgages in Middlesbrough

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.

Can I sell my home if I have a Shared Ownership Mortgage in Middlesbrough?

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.

Is a Shared Ownership Mortgage in Middlesbrough right for me?

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.

Date Last Edited: February 19, 2024