Just over three years ago I handed over thousands of pounds to a housing association, signed a mortgage deal and moved into a beautiful two bed flat which is all mine. When I tell people I do shared ownership a lot of people looked at me with confused faces and don’t quite understand what it is so I thought i’d dedicate this blog post to explaining the basics behind it.
In simple terms what is shared ownership?
Shared ownership is part renting and part owning a property. In a time where property prices are so high you either have to be in a couple/ group, or be earning serious mega bucks in order to get your foot on the property ladder. And don’t get started about London prices.
Renting can be seen as many as throwing away money (hence why I upped from my rented flat within 11 months). Shared ownership see’s you get a mortgage on part of the property and a housing association owning the other part. The percentage you get will generally always be under 50% to give the other party the ‘larger’ chunk, but you can choose to up your side in the future in a lot of properties.
For example with my property after my deposit and mortgage I own 45% of my property where I pay a monthly mortgage to the bank (eurgh!) And then the housing association owns the other 55% so I pay rent on that part of the property. For some properties in say Central London your proportion may be as little as 20% but this depends on the overall property price.
So you pay a mortgage and rent?
Yes I pay both, but added together this was the same price as just renting a similar sized/ priced property and this way I am building up my pot to put towards a larger/ bigger property in the future, and i’ve got my foot on the property ladder.
How did you find a shared ownership property?
For me it was very much being in the right place at the right time. Shared ownership properties tend to be new builds rather than older properties and there are so many being built at the moment. A quick Google search will show you properties or developments in your area but I saw mine by driving past and seeing a sign. From seeing the sign and deciding to initially have a look to getting my keys and moving in was about three months max.
How was the process so quick?
The great thing about it was the fact that I had no chain. I did not have a property to sell so could move straight in, and because I was going into a new build they didn’t have someone trying to sell. Obviously if you move into a property which already has someone in it might take a little longer, but generally it can be quicker than going through a full mortgage process.
The thought of mortgages scares me a little….
It scared me to begin with, but shared ownership properties tend to require you to get the help of a financial advisor. My financial advisor was great he went through all the paperwork with me and explained all the different mortgages to me as I had no idea the difference between a tracker or a fixed mortgage. Last month I had to renew my mortgage as I had scarily been there for three years (where does the time go?) and it all started to make sense: yay!
Are there additional costs in shared ownership properties?
As well as your initial deposit you will need a few grand spare for solicitors costs, financial advisor costs and some other things which you are required to get. But in the grand scheme of things it’s worth it to get your own property.