Shared ownership mortgages are specialist mortgages that are designed to cater for purchasing property through shared ownership schemes. Shared ownership schemes are also known as shared equity schemes and have become a popular method for first-time-buyers to get a foot on the property ladder if they do not have the funds necessary to pay for the deposit required for more traditional mortgage products.



At present there are only a few lenders who offer shared ownership mortgages, however, the list is growing. Even the Government has showed interest in becoming involved in shared ownership schemes in the wake of increasing property prices and low home affordability.

A shared ownership scheme allows a property buyer to purchase part of a property and rent the remainder from the property developer. This means that the developer and the property buyer jointly own the property. The buyer can fund the purchase of the portion of the property they purchase with shared ownership mortgages and therefore get a foot onto the property ladder without having to pay for a cash deposit.

As time goes by, the buyer can purchase additional portions of the property until such time as they own it outright. Shared ownership mortgages can assist the buyer in funding the purchase of the additional portions of the property. The amount of money that is required to purchase the additional portions of the property will be assessed on the market value of the property at the time. This means that as property prices rise, the amount of money that will be required to fund the additional purchased will also rise.

Any repairs and maintenance on the property will most likely be required to be funded by the occupant, regardless of the fact that the property developer will still own part of the property. Shared ownership mortgages are usually only available to applicants who are in full-time permanent employment and who have a clean credit history.

The target market for shared ownership mortgages is hard working individuals who are good candidates for keeping up with the repayments on the mortgage but who may not have the means to save enough cash for a deposit. Potential applicants who have an intermittent working pattern or who suffer from adverse credit may not be successful in securing shared ownership mortgages.

There are, however, more and more shared ownership mortgage products entering the market as property prices continue to rise and home ownership becomes less affordable to first-time-buyers. This may mean that potential applicants with intermittent working patterns or light adverse credit files may soon be eligible to apply for such home loan products.

Independent mortgage advisors are able to advise individuals as to whether they qualify for shared ownership mortgages and whether they are the right product to consider in the first place. Some first-time-buyer applicants may be better suited to other types for home loans such as guarantor mortgages or home loans with high loan-to-value ratios that do not require a deposit. Independent mortgage advisors should be able to advise which products are the most suitable for borrowers.