Shared ownership is an excellent option for first-time buyers and those looking to move to London who want to get on the property ladder without needing to take out a mortgage for the full value of a home.
Introduced by the government, the shared ownership scheme in London allows you to purchase a share of a property, usually between 25% and 75% (though in some cases, it can be as low as 10%).
You’ll pay rent on the remaining share, which a housing association or developer in London owns.
The arrangement means that as you pay rent, you can eventually buy more shares of the property through a process called staircasing.
This allows you to increase your ownership until you own the entire home gradually. Staircasing is optional, and its impact on your mortgage will depend on market conditions and your property’s value.
A mortgage advisor in London can explain how this works and guide you through your options, including whether a further advance might be beneficial.
If you’re considering a shared ownership mortgage in London, there are a few key criteria to keep in mind.
First, you need to be over 18 years old. Your annual household income should not exceed £90,000, and you must not be able to afford a full mortgage or the entire deposit for the property you want to buy in London.
Although you will need at least a 5% deposit for the share you’re purchasing, you don’t need a 5% deposit on the full value of the property.
You should also meet one of these conditions: you’re a first-time buyer in London, a previous homeowner unable to afford another home, forming a new household, already own a shared ownership property and are looking to move, or are an existing homeowner who can’t afford to move to a more suitable home.
Speaking to a mortgage advisor in London can help you determine if shared ownership is the best option for you, or if another scheme might better suit your needs. They’ll go through everything during your free mortgage appointment.
For those currently owning a home in London, you’ll need to have a ‘sold subject to contract’ (STC) agreement, which is a formally accepted offer for the sale of your current property.
You’ll also need a ‘memorandum of sale’, which confirms the agreed sale price and your intent to sell. Before finalising a shared ownership purchase in London, your current home must be sold.
Shared ownership is also available to those over the age of 55, offering another option for older buyers alongside various mortgages for over 50s in London.
Additionally, shared ownership can cater to specific long-term needs, such as requiring a ground-floor property for accessibility.
If you’re a current or former member of the armed forces, you may receive priority when applying for shared ownership properties in London, depending on your role.
The exact share you can purchase under shared ownership in London will depend on your affordability and the terms set by the housing association or developer.
Typically, you can buy between 25% and 75% of the property, though sometimes you can start with as little as 10%.
Instead of paying for your full share upfront, you’ll need a 5% deposit of the portion you’re buying.
For example, if the property is valued at £100,000 and you’re purchasing 50%, your deposit would be 5% of £50,000, which is £2,500.
You’ll usually have the option to buy more shares over time, a process called staircasing.
If your agreement doesn’t specify this, things could get more complex, but a mortgage advisor in London can help you navigate these details.
Shared ownership in London means you share ownership of your home with a housing association or developer since you only mortgage a percentage of the property.
The rest remains under the ownership of the other party. You can, however, take out a shared ownership mortgage with someone else, such as a friend or partner—there are no restrictions on joint mortgages.
Selling a shared ownership property in London can be a bit tricky. To sell outright, you typically need to own 100% of the property.
If you don’t own 100%, you’ll need to notify your housing association or developer, who has the first right of refusal.
This means they can either buy the property back or find another buyer before you can list it on the open market.
If they don’t act within the specified timeframe, you can then proceed to find a buyer yourself. The type of lease you have may also influence the sale process.
Some leases, like the “designated protected area – mandatory buyback” lease, give the landlord the choice to buy the property back or find their own buyer.
Selling usually involves a property valuation, an EPC, photography, finding a buyer, and completing the sale.
Beyond your mortgage payments on the share you own and rent on the remaining share, there are other costs associated with shared ownership in London.
These can include service charges, maintenance fees, and possibly ground rent, all depending on the terms agreed with your landlord.
Service charges are typically annual and can fluctuate based on maintenance needs such as cleaning, general upkeep, or landscaping.
Your housing association can provide a breakdown of these costs and notify you of any changes for the upcoming year.
General utility bills, council tax, contents insurance, and similar expenses will also be your responsibility.
Don’t forget to consider solicitor fees as well. For details on Stamp Duty Land Tax as a first-time buyer in London, it’s best to speak with a qualified tax advisor or visit the Share to Buy website.
If you’re considering renovations on your shared ownership property in London, you’ll likely need permission from your landlord before making significant changes.
Keep in mind that renovations can increase the property’s value, which may affect the costs if you plan to purchase more shares in the future.
Your mortgage advisor in London can provide more details on how this works during your mortgage appointment.
If you’re struggling with your mortgage, rent, or service charge payments, whether under shared ownership in London or otherwise, it’s vital to contact your mortgage lender and landlord as soon as possible.
They can offer solutions like payment plans or financial guidance to help manage the situation. Continuing to miss payments could lead to arrears and the risk of repossession.
Both parties prefer to find a workable solution rather than resorting to repossession, as this is a costly process for everyone involved.
Yes, you can remortgage a shared ownership property in London, although it can be more complex due to the nature of shared ownership.
You might remortgage to secure a better interest rate on your current share, purchase additional shares, or even release equity.
Speaking with a mortgage broker in London is recommended, as remortgaging shared ownership properties can be challenging without expert advice.
Repairs and maintenance are typically your responsibility, so it’s important to review your lease or speak with your landlord for specifics.
You’ll likely contribute to the upkeep of external and communal areas through your service charges, which can vary each year based on the landlord’s updates and maintenance activities.
You generally have the right to extend the lease on your shared ownership property in London. The cost of extending the lease can vary, and it’s often more affordable to extend before your lease falls below 80 years.
It’s possible to obtain a mortgage on a shared ownership property in London with bad credit, though it can be more challenging.
You might need a larger deposit and may face higher interest rates. Since shared ownership is designed to be more affordable, a higher deposit could be a barrier.
You might consider purchasing a smaller share initially or using a gifted deposit from a family member to increase your deposit amount.
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Your mortgage advisor in London will take a detailed look at your income and outgoings to assess whether you're eligible for shared ownership. They’ll also evaluate your mortgage affordability to ensure you can comfortably manage the payments on the share you’re looking to buy.
Our team will search through a wide range of mortgage products to find the most suitable option for your circumstances. Whether you're a first-time buyer or looking to remortgage in London, we aim to match you with a deal that best meets your needs.
Once your offer on a property is accepted, we’ll take care of submitting your full mortgage application, along with all the necessary documents, to the lender. We’ll handle the paperwork to help ensure everything runs smoothly.
Our service doesn’t stop at securing the best mortgage deal for you. We also provide tailored recommendations for insurance policies that can protect you and your family, giving you peace of mind for the future.
Your mortgage advisor in London will carefully review your income and expenses to determine if you’re eligible for shared ownership. They’ll also assess how much you can comfortably borrow, ensuring your mortgage is affordable based on your financial situation.
Our team will explore a variety of mortgage products to pinpoint the most suitable option for you. Whether you're a first-time buyer or remortgaging in London, we aim to match you with a deal that best fits your needs.
Using our new booking system, you are now able to book your free mortgage appointment online. We have availability 7 days a week, so you can choose slots on a weekend if that appeals to you more.
We have access to an extensive panel of both high street and specialist lenders, allowing us to tailor our service to your specific needs. This means we can find the most suitable mortgage deal for your situation, whether you're buying your first home or remortgaging in London.
If you’re a first-time buyer or key worker, like a teacher or nurse, living in London, you may come across properties that fall under the First Homes Scheme.
This scheme offers newly built homes at a significant discount from their market price, with discounts starting at 30% and sometimes going up to 50%.
The idea is to provide affordable housing with a lasting discount, meaning when you sell the property, it remains affordable for the next buyer.
Availability is limited and can vary depending on where you live in London.
A Lifetime ISA is a savings account for people aged 18-39, designed to help with either buying your first home or saving for retirement.
You can contribute up to £4,000 a year, and the government will top it up with a 25% bonus, which could give you an extra £1,000 annually.
You can use the savings, including the bonus, to buy a home valued up to £450,000 (as of 2024). To use the funds for a home purchase, your account must be open for at least 12 months.
While early withdrawals may incur penalties, a Lifetime ISA is a fantastic way to boost your savings for a home in London with the help of government bonuses.
If you’ve been renting from a council or housing association in London, the Right to Buy scheme could help you buy your home at a discounted price.
The longer you’ve been a tenant, the larger the discount you may be entitled to, making it easier to transition from renter to homeowner.
In many cases, the discount can even cover most of your deposit, allowing you to purchase a home without saving for the full deposit upfront.
Do keep in mind, if you sell the property within the first five years, you may need to repay some or all of the discount.
If you’re a first-time buyer in London and saving for a deposit is challenging, but you can comfortably manage monthly mortgage payments, many lenders offer 95% mortgages.
With these, you only need to save or be gifted 5% of the property price as a deposit, making it easier to buy your first home.
This scheme is encouraged by the government as a way to make homeownership more accessible to first-time buyers in London and across the country.
If you’re looking to buy a property in London but need a little help with affordability, a joint borrower, sole proprietor mortgage might be the answer.
This allows a family member or friend to join you on the mortgage without being named on the property deeds.
By adding their income into the mix, you may be able to qualify for a larger mortgage than your own income alone would allow.
Since the joint borrower isn’t listed on the deeds, you’ll be treated as a sole first-time buyer when it comes to Stamp Duty Land Tax.
It’s a good idea to speak with a tax advisor for more detailed information on how this works.
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