How does a Shared Ownership mortgage work?

woman on sofa with dog in shared ownership mortgage property

Shared ownership mortgages represent an innovative pathway to homeownership, particularly useful for those who find it challenging to purchase a property outright. In this comprehensive guide, we’ll explore the intricacies of shared ownership mortgages, providing you with a clearer understanding of how they work and whether they might be the right choice for you.

What is Shared Ownership?

Shared ownership is a government-backed scheme, designed to assist first-time buyers, or those who do not currently own a home, in purchasing a property. The scheme allows you to buy a share of a home (between 25% and 75% of the home’s value) and pay rent on the remaining share.


So, how do shared ownership mortgages work?

Buying a Share: Initially, you purchase a portion of the property’s value. The percentage you buy is up to you, but is usually between 25% and 75%. This is funded through a deposit and a mortgage.

Paying Rent: On the portion of the property you don’t own, you pay rent to the housing association or entity that owns the remaining share. This rent is usually set at a reduced rate, lower than the market value.

Increasing Your Share: Over time, you have the option to increase your share in the property through a process known as ‘staircasing’. This means you can gradually own a larger portion of your home, thereby reducing the rent you pay.

Selling the Property: If you decide to sell your shared ownership property, the housing association has the ‘right of first refusal’. This means they have the first chance to buy it before it is offered on the open market.


Advantages of Shared Ownership Mortgages

Affordability: Since you’re only buying a portion of the property, the deposit required is usually much smaller than if you were buying a home outright.

Flexibility: You can increase your share over time, giving you more flexibility than in a traditional mortgage.

Accessibility: It makes property ownership accessible to those who may find it challenging to buy a home outright, such as first-time buyers or lower-income families.


Considerations and Potential Downsides

Availability: Shared ownership properties are usually part of specific schemes and are not as widely available as regular properties.

Restrictions: There may be restrictions on selling or altering the property.

Additional Costs: Besides mortgage and rent, you will also be responsible for maintenance costs and service charges.


Eligibility Criteria

Income Limits: Your household income must be less than £80,000 a year (£90,000 in London).

First-Time Buyers or Those in Need: Preference is often given to first-time buyers or those who are in need of housing assistance.

Financial Assessment: You must undergo a financial assessment to ensure you can afford the mortgage payments and rent.


How to Apply

Find a Property: Look for shared ownership properties in your desired area. These are often listed on local housing association websites or through estate agents specialising in shared ownership.

Financial Assessment: You will need to go through a financial assessment with the housing association.

Mortgage Application: Once approved, you can apply for a shared ownership mortgage. It’s wise to speak with a mortgage broker at this point.

Complete the Purchase: After obtaining a mortgage, you can complete the purchase and move into your new home.



Shared ownership mortgages offer a unique and flexible route towards homeownership, particularly for those who may find it difficult to buy a property outright. While there are certain limitations and considerations to bear in mind, for many, it represents a practical and affordable solution to owning their own home. As with any financial commitment, it’s essential to do thorough research and seek professional advice to ensure that a shared ownership mortgage aligns with your long-term financial goals and circumstances.


If you’d like help or advice with a shared ownership mortgage or protection products available, contact one of our friendly advisors who would be happy to have a chat today.


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