How Does Shared Ownership Work?

You’ve come to the right place if you’re looking at purchasing a new home – no longer do you need to worry about hefty deposits and repayments, with Shared Ownership you can get yourself on the property ladder with minimal stress.

Forget about having to scrape together a deposit upwards of £10,000 - Shared Ownership works by allowing you to purchase a share of a home – usually between 40% and 75% in order to make it more affordable (in some cases, you can even buy as low as 25%).

Not only does this mean you only pay a mortgage on the share that you own but you can have a deposit as low as 5% of the total share amount. You then pay a below-market rent on the rest of your sparkly new home to the friendly folk at Aster.

What are the Advantages of Shared Ownership?

Get yourself on the property ladder

Don’t let your dreams of getting on the property ladder fade, Shared Ownership allows you to get on the ladder and gives you that all important stability without having to fork out for large mortgage repayments.

In comparison to traditional home-buying, deposits are lower and monthly repayments will often work out cheaper than a standard mortgage or if you were renting.

Keep climbing those stairs

You’ve probably noticed there are a great deal of climbing metaphors associated with home-buying and we have another one for you. Once you purchase your Shared Ownership home you have the chance to continue to buy shares – this is called ‘staircasing’. In most cases you can eventually own 100%, just ask us and we can check the lease for you!

Long Term Security

Tired of living with the fear your landlord could come along and ask you to pack up at a moment’s notice? Whilst private standard renting does not offer long term security – Shared Ownership does as long as rent, and mortgage payments are made.

What are the Disadvantages of Shared Ownership?

Don’t worry – we’re going to be upfront with you and let you know the small disadvantages that come along with shared ownership.

First of all, some lenders might not offer mortgages on Shared Ownership but there is no need to fret as the majority do.

Now we need to talk about the small issue of leasehold - no matter how low your share you will be required to pay the full amount of ground rent and service charge on your property, as well as maintenance costs after the defect period.

All properties are sold as leasehold which means you will pay ground rent on the property, usually for a term of 99-125 years. Don’t worry though as you can still sell the home - we have a dedicated resale team to help you!

In some cases, you may be restricted on what home improvements you can make – although most decorating jobs are perfectly fine.

What are the Different Percentages?

Now time for a bit of maths – you can actually own different percentages of your home, there is no set amount.

Your percentage will depend on your circumstances and preferences. You will usually buy a share between 40%-75% on your initial purchase - occasionally you can even go as low as 25%. From there you can continue to purchase more shares – called ‘staircasing’, as we mentioned earlier. If you keep climbing that staircase you can go on to own your home outright. At this point, there is often the opportunity to acquire the freehold for your house too, although sadly flats have to remain leasehold.

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