Shared Ownership explained

illustration of Shared Ownership explained

What is Shared Ownership, anyway?

Shared Ownership (sometimes called Part Ownership) is where you buy part of a property and rent the rest. You take out a mortgage on the bit you're buying, then pay a reduced rent on the bit you don't own. You’re able to buy between 25-75% of the home, and can buy some or all of the remaining share later on when you can afford to. 

Shared Ownership is only available for new-build homes and some existing properties via specific resale programmes from housing associations. They’re always leasehold, meaning you won’t own the land your property is built on and may have to pay ground rent and maintenance costs.

How are Shared Ownership mortgages different from other mortgages?

Shared Ownership mortgages help people who can’t afford 100% of the cost of a home to purchase a share of a property and rent the rest. It’s a good option if you’re struggling to save for a big deposit. You'll generally put down between a deposit of 5-10% of the share you're buying.

To qualify for a Shared Ownership mortgage, you'll have to meet the following criteria:

  • You're a first time buyer, or don't currently own a home

  • Your combined household earns less than £80,000 a year (£90,000 in London)

To apply, you’ll first need to contact your local housing association to find out if Shared Ownership is available where you are. You’ll then need to register on the official scheme in your region.

Is Shared Ownership a good idea?

There’s over 200,000 UK properties that’ve been bought through the Shared Ownership scheme, so something’s definitely working! However, there are a few things you should consider when deciding if Shared Ownership is the right route for you:

Pros

  • It's one of the cheapest ways to get on the property ladder

  • Less money up front - you only need a small deposit for the share you're buying

  • You can increase the share you own when you're able to afford it

Cons

  • You'll need to have the property valued before increasing your buyer's share. If house prices have increased since you took out the mortgage, you could end up paying more than you would have at the start

  • You'll have to give the housing association first refusal if you decide to sell the property

  • The homes are always leasehold, so you'll be liable to pay any ground rent or service charges in full (no matter what percentage of the property you actually own)

What deposit do I need if I’m doing Shared Ownership?

With Shared Ownership, you only need to put down a deposit on the share you're actually buying, so it’s less than it would be with a regular mortgage. The average Shared Ownership deposit is between 5-10% of the share.

Alongside your deposit, you'll need to put aside money for moving costs, stamp duty (if applicable) solicitors fees and leasehold fees. If you're buying a flat you'll also need to factor in yearly ground rent costs. Ground rent covers any building maintenance costs and upkeep of communal areas. 

Is there a minimum credit score I need to get a Shared Ownership mortgage?

There isn’t a specific score needed to get a Shared Ownership mortgage, because there's no such thing as a universally-recognised credit score

When you apply for a Shared Ownership mortgage, lenders look at a number of factors to assess your risk and work out if you'll be able to make the repayments without struggling. The higher your score, the more chance you'll have of being accepted for a mortgage and getting the best rates. 

It’s a good idea to get ahead of the curve and see what the lenders will see when they look at your credit file. This way, you can see what’ll make you look risky, and how to explain various issues. Checking your score across the main UK credit agencies will give you an idea of how risky you might look to lenders. You can do this for free using checkmyfile.

Where do I start with getting a Shared Ownership mortgage?

After you’ve registered for Shared Ownership you can start house-hunting. Your local housing association will need to carry out a financial assessment to see how much you can buy and how much you’ll need to rent. 

You should start to gather the paperwork you need for your Shared Ownership mortgage application so you’re as prepared as possible. You'll need:

  • Proof of identity (passport or driving licence)

  • Proof of your current address (usually a utility bill)

  • Payslips or accounts if you’re self-employed

  • Proof of your deposit

  • A credit report (you can get this for free using checkmyfile)

Some mortgage companies don’t offer Shared Ownership mortgages, so it’s a good idea to work with a mortgage broker who can find you the best deal. To find a great mortgage broker, use the Haysto platform! Our clever algorithm matches you with the right mortgage broker for your unique situation. Make an enquiry to get started. 

If your situation is a bit more complicated, it’s still possible to get a Shared Ownership mortgage. You’ll probably just need a bit of help finding the right lender and putting your application together. 

If you have issues such as a bad credit history or a complex income (i.e. self-employed) then working with a mortgage broker will really improve your chances of being accepted. Your broker will know which lenders are most likely to give you a mortgage, and they’ll know how to present your situation in the best light.

WE MAKE MORTGAGES POSSIBLE

Over 50% of mortgages for people who are self-employed or have bad credit aren’t available directly to you. They’re only available through specialist brokers. Using our platform guarantees you’ll be matched with a broker who has a proven track record of making mortgages possible for people like you. Less processing, more understanding.

useful links

Our Guides

Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.

Our Calculators

Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.

Get connected to a 5* specialist mortgage broker who can make a mortgage possible.

Haven't we met before?