For a number of years now, shared ownership has been gaining traction and becoming more and more popular for younger buyers. Despite recent drops in property prices, the average price of a property in the UK is over £250,000 and in places like London this is doubled to around £500,000. This has meant that the average age of a first time buyer in London is now around 35 years old and the rest of the country is not far behind. A volatile mortgage market has also meant that getting a mortgage to cover a a purchase of £250,000 or more has become increasingly difficult for first time buyers with smaller deposits and potentially lower income than older borrowers. All of these factors have contributed to the rise in shared ownership homeowners.
What Is Shared Ownership?
Shared ownership is exactly what is says on the tin. Rather than purchasing an entire property at full market value, shared ownership will allow you to purchase a share in a property. You will own your share and the remaining share of the property will be owned by a housing association or a local authority normally. You can mortgage your share and will pay this per month. You will also be expected to pay rent on the share that you do not own per month. So what could this look like?
Full market value: £500,000
Minimum shared ownership share available 25%: £125,000
10% deposit contribution: £12,5000
Mortgage required: £112,500
Monthly mortgage payment over 30 years at 5.74% (example): £656
Example rental payment on remaining share: £800
Total monthly commitment: £1,456
Can You Ever Own The Entire Shared Ownership Property?
Shared ownership properties are firstly designed to help people to get onto the property ladder more easily and secondly they are designed so that hypothetically you can eventually purchase the entire property. As long as your circumstances permit you to. Shared ownership properties will allow you to remortgage further down the line when your income increases and purchase more shares in the property with the help of remortgages and cash contributions from savings. This is called staircasing.
Leeds Building Society Helps Shared Ownership Homeowners To Staircase
Aside from earning enough to remortgage and purchase a larger share in the property, one of the major issues that shared ownership homeowners have is being able to save enough money themselves to purchase more of the property. However, Leeds Building Society have announced that they will be introducing a new shared ownership saving account.
The new savings account is designed to accelerate the growth of Leeds Building Society members savings, helping them to increase their shared ownership percentage. The aptly named ‘Shared Ownership Saver’ has a very good interest rate of 6% which means that savings will increase much faster than they would in another savings account and help shared ownership homeowners to staircase quicker than they normally would have.
Speak To a Shared Ownership London Mortgage Broker
Being based in London where often shared ownership is the only option for young borrowers, we are very knowledgeable in shared ownership mortgages and staircasing applications. If you are interested in purchasing a shared ownership property or are looking to remortgage your shared ownership home, please feel free to give our dedicated advisors a call or send us an email today. We are here to help.