New-build shared ownership can be a great alternative for new buyers
A new-build shared ownership property can be a great option to when looking to take the first steps on the home ownership ladder. House prices are going up, and in many cases it can be quite difficult for first time buyers to firstly save enough money for a deposit, and secondly afford to borrow enough mortgage based on their income. In most cases, you will need at least a 10% deposit to purchase a property, and generally mortgage lenders will be willing to lend you around 4.5X your income as a loan. So, if you are looking at buying a £250,000 house, you will need to save at least £25,000 deposit and you will need a mortgage of £225,000. Which equals a minimum income of £50,000. Considering starting salaries in the UK on average are around £25,000 this can seem like an impossible feat! However, shared ownership can be a great option.
New-Build Shared Ownership
Shared ownership is a a way of purchasing a property which means that you can purchase a share rather than the whole value of the property, with the option of purchasing the entire property further down the line. Normally you are allowed to purchase a minimum of 25% share of a property, you would get a mortgage on this share of the property (after taking out your minimum deposit amount), and the other 75% share of the property is owned by a housing association who would charge you rent on this share. So, for example, if you were purchasing a £250,000 house at 25% share, you would be buying £62,500. The other £187,500 will still be owned by the association and you will pay rent on this, as well as the mortgage on the 25% that you are buying.
Shared ownership is generally only available on new-build properties, and not every mortgage lender will offer new-build shared ownership mortgage products. That’s why it is important to work with a specialist whole of market mortgage broker like ourselves at Oportfolio who has access to the entire mortgage lender market.
New-Build Shared Ownership Lender
As popularity grows for shared ownership and other schemes to help first time buyers purchase their first home, more and more lenders are starting to enter the market. In a message to our team of mortgage brokers this morning, lender Teachers Building Society, a lender initially set up to benefit teaching professionals, announced that they offer shared ownership mortgage products. And more importantly, you don’t have to be a teacher to use them!
Teachers Building Society is a fantastic lender who offers a lot of niche mortgage products and criteria. Branching into the new-build shared ownership market really adds another string to their bow. Let’s take a look at what Teachers actually offers:
- Shared Ownership mortgage applications from both teachers and to non teachers welcomed
- For teaching professionals specifically, they can lend up to 95% LTV of the share they are buying
- For Non-Teacher lending they can lend up to 90% LTV of the share they are buying
- Their standard fixed rate products (2 or 5 year fixed rate options) are available for shared ownership new build purchase
- They do not currently offer shared ownership variable rate product options
- With the exception of applicants staircasing to 100% they will not offer shared ownership remortgages.
Teachers Building Society Shared Ownership Mortgage Products
As we know, mortgage rates change almost on a daily basis, however Teachers currently offer some competitive products for their shared ownership mortgages. Remember, the rates may be higher than standard mortgage products, but in many cases the loan amount is much lower for shared ownership homes, and therefore the mortgage will be much lower. Here are some highlights of Teacher’s current mortgage products:
Exclusive Rates For Teachers:
Purchase:
- 90% 2 years 5.74%
- 90% 5 years 4.79%
- 90% 2 years 5.84%
- 90% 2 years 5.74%
Available To Anyone:
Purchase:
- 90% 2 years 6.24%
- 90% 5 years 5.99%
Remortgage:
- 90% 2 years 6.24%
- 90% 5 years 5.99%
Speak To A Shared Ownership Mortgage Advisor Today
If you or anyone you know is considering purchasing a property using shared ownership, then please feel free to give our team of advisors a call for a fee free initial mortgage consultation. We are here to help.
