There are some distinct differences; with shared equity schemes, you purchase a share of the property, example 85%, the remaining 15% is owned by the builder or the Government. Shared ownership is different in as much as you will pay rent on the portion you don't own.
Yet another variation is in a share to buy mortgage. Rather than arranging a deal with a housing association or builder, individuals decide to get together and agree a share of the property. Normally, its family members or friends who decide to get together and purchase the property.
In other words, you still have a form of shared equity in that you do not own the whole property but have a share in it. The main difference is that you are sharing the joint ownership of the property with other private individuals rather than the Government.
How do you define a shared ownership mortgage?
These types of schemes work very well for buyers who are investing in their first property. You part own a property and part rent it. There is an added advantage that you only need a deposit for the percentage you are buying.
The rent calculation
Your mortgage broker will help to assess what you can afford and this is based on what housing association calculations, this really is about affordability!
As an example, rent was calculated as 211 pounds per month based on the share owned by the housing association. In this case the client would be paying a mortgage on top of this figure to a lender.
Are there any differences in mortgage products for these type of loans?
Best advice is to firstly find out what is available to you before looking for your new home. The unfortunate reality is that some lenders will consider shared equity or shared ownership and some will not.
Does what I earn affect my ability for a shared ownership deal?
How much you earn can sometimes affect whether you qualify for a shared ownership mortgages. It's always worth finding out first. I have had situations where clients had paid a non refundable mortgage booking fee only to find out later that they did not qualify!
Is there an easy way to determine the deposit needed?
There's no easy answer here as it depends on how much of the equity share you are buying. Some lenders will advance up to 95% of the loan to value of the share you purchase whereas others will not. Deposits will vary so you will need to check with your lender.
For example, if you bought a 25% share of a property valued at 210,000 pounds, then you would need a minimum deposit of 2625 pounds based on a 5% deposit rate, your share of the property would be 52,500 pounds. If you wanted to buy 50% then your share would be 10,5000 pounds and you would therefore need a minimum deposit of 5250 pounds.
Are mortgages for shared ownership easy or hard to get hold of?
No simple answer here, you will be assessed against the lenders criteria, if you are a good fit you will get a mortgage and if you aren't you wont. At any rate your mortgage broker should be able to advise you.
Lenders don't unfortunately have common requirements, they are normally very individual to each lender. Getting a loan can sometimes be fairly straightforward whereas at other times it is not.
We have a legal requirement to include the following statement:- Your home may be at risk if you do not keep up repayments on your mortgage.
I have written several articles related to mortgages, you will find more dotted around the Internet. - 29971
Yet another variation is in a share to buy mortgage. Rather than arranging a deal with a housing association or builder, individuals decide to get together and agree a share of the property. Normally, its family members or friends who decide to get together and purchase the property.
In other words, you still have a form of shared equity in that you do not own the whole property but have a share in it. The main difference is that you are sharing the joint ownership of the property with other private individuals rather than the Government.
How do you define a shared ownership mortgage?
These types of schemes work very well for buyers who are investing in their first property. You part own a property and part rent it. There is an added advantage that you only need a deposit for the percentage you are buying.
The rent calculation
Your mortgage broker will help to assess what you can afford and this is based on what housing association calculations, this really is about affordability!
As an example, rent was calculated as 211 pounds per month based on the share owned by the housing association. In this case the client would be paying a mortgage on top of this figure to a lender.
Are there any differences in mortgage products for these type of loans?
Best advice is to firstly find out what is available to you before looking for your new home. The unfortunate reality is that some lenders will consider shared equity or shared ownership and some will not.
Does what I earn affect my ability for a shared ownership deal?
How much you earn can sometimes affect whether you qualify for a shared ownership mortgages. It's always worth finding out first. I have had situations where clients had paid a non refundable mortgage booking fee only to find out later that they did not qualify!
Is there an easy way to determine the deposit needed?
There's no easy answer here as it depends on how much of the equity share you are buying. Some lenders will advance up to 95% of the loan to value of the share you purchase whereas others will not. Deposits will vary so you will need to check with your lender.
For example, if you bought a 25% share of a property valued at 210,000 pounds, then you would need a minimum deposit of 2625 pounds based on a 5% deposit rate, your share of the property would be 52,500 pounds. If you wanted to buy 50% then your share would be 10,5000 pounds and you would therefore need a minimum deposit of 5250 pounds.
Are mortgages for shared ownership easy or hard to get hold of?
No simple answer here, you will be assessed against the lenders criteria, if you are a good fit you will get a mortgage and if you aren't you wont. At any rate your mortgage broker should be able to advise you.
Lenders don't unfortunately have common requirements, they are normally very individual to each lender. Getting a loan can sometimes be fairly straightforward whereas at other times it is not.
We have a legal requirement to include the following statement:- Your home may be at risk if you do not keep up repayments on your mortgage.
I have written several articles related to mortgages, you will find more dotted around the Internet. - 29971
About the Author:
Find out more about shared ownership mortgages. Stop by Vivienne Connery's UK website where you can find out all about shared equity mortgages and whether they may be right for you.
