An Ultimate Guide to Shared Ownership Mortgages: Eligibility and Expert Tips

Learn how Shared Ownership mortgages work, eligibility, how much you can borrow, pros and cons, and available lenders.

Shared Ownership mortgages offer an affordable path to homeownership for those who may need more financial capacity to purchase a property outright. This scheme, which allows you to buy a share of a property and pay rent on the remainder, can be a viable solution for first-time buyers or those with limited savings.

What is Shared Ownership?

Shared Ownership is a government-backed initiative designed to help individuals own a portion of a property while renting the remaining part. You can purchase a share between 25% and 75% of the property’s value, and rent the remaining portion from a housing association or developer. The rent is typically below market value, which makes it a more affordable option.

The concept also allows for staircasing, where you can buy additional shares over time, gradually increasing your ownership and reducing your rent until you potentially own 100% of the property.

Key Features:

Buy a share (usually 25% to 75%) and pay rent on the rest.
Affordable deposit requirements (5% to 10% of your share, not the full property value).
Option to staircase and own the entire property in the future.

Am I Eligible?

Eligibility criteria for Shared Ownership mortgages can vary slightly depending on location and housing associations, but the basic requirements are generally:

Income: Your annual household income must be less than £80,000 (or £90,000 if you’re in London).
First-Time Buyers: It is primarily aimed at first-time buyers, though it’s also open to individuals who previously owned a home but can’t afford to buy one now.
Other Factors: In some areas, priority may be given to key workers (such as NHS staff, teachers, and police officers), or those already living locally.

Additionally, you will need to undergo a financial assessment to demonstrate that you can afford the mortgage, rent, and any associated costs, such as service charges.

How to Apply

Applying for Shared Ownership involves a structured process. Here’s a step-by-step guide:

Step 1: Register your interest: First, you need to register with a local housing association or through national websites like Help to Buy.
Step 2: Eligibility checks: After registering, your income and employment status will be assessed. This is to confirm that you meet the criteria for Shared Ownership.
Step 3: Search for properties: Once approved, you can start looking for properties that are available under the Shared Ownership scheme.
Step 4: Mortgage approval: Before you can buy, you’ll need to secure a mortgage agreement in principle from a lender. This confirms the amount you can borrow based on your financial circumstances.
Step 5: Make an offer: Once you find a property, make a formal offer on the share you intend to buy, and proceed with the legal and financial arrangements.

It’s advisable to work with a specialist mortgage broker to guide you through the process, as Shared Ownership mortgages have unique requirements compared to conventional home loans.

How to Get a Shared Ownership Mortgage

A Shared Ownership mortgage differs from a regular mortgage in that it only covers the percentage of the property you are purchasing, not the full value. Here’s how to secure one:

Find a specialist lender: Not all mortgage lenders offer Shared Ownership products, so it’s important to choose one familiar with the scheme. Lenders like Nationwide, Leeds Building Society, and Halifax are popular for Shared Ownership.
Get a mortgage in principle: Before making an offer on a property, you’ll need a mortgage in principle. This document shows how much you can borrow based on your income and expenses.
Submit a formal application: Once you’ve found a property, submit a mortgage application with the lender. They’ll assess your financial situation, perform a credit check, and decide whether to grant the mortgage.

How Much You Can Borrow

The amount you can borrow under a Shared Ownership mortgage depends on your income, outgoings, and the lender’s criteria. Typically, mortgage lenders will allow you to borrow up to 4 to 4.5 times your annual salary. However, they will also factor in other financial commitments, such as existing debts and living expenses, to calculate affordability.

For example:

Household income: £40,000 per year.
Borrowing limit: Up to £160,000 (4 times the income).

Keep in mind that this amount would only apply to the share of the property you’re buying. For instance, if you are buying a 50% share of a property valued at £300,000, you would need a mortgage of £150,000, which may fall well within your borrowing capacity.

How Much Deposit Do You Need?

One of the major benefits of Shared Ownership is the reduced deposit requirement. Unlike traditional mortgages where you need a deposit based on the full property price, in Shared Ownership you only need a deposit for the share you are buying. Typically, deposits range between 5% to 10% of the share’s value.

For example:

Property price: £200,000
Share purchased: 50% (£100,000)
Deposit needed: 5% of £100,000 = £5,000

This makes Shared Ownership particularly attractive for buyers with limited savings, as the upfront costs are significantly lower.

Buying More Shares (Staircasing)

Staircasing refers to the process of buying additional shares in your Shared Ownership property, allowing you to gradually increase your ownership. The more shares you buy, the less rent you will pay. Eventually, you may own 100% of the property, at which point you’ll no longer need to pay rent.

Key considerations when staircasing:

Market Value: The cost of buying additional shares is based on the current market value of the property, not the original purchase price. If the property has increased in value, the cost of staircasing will be higher.
Legal and Valuation Costs: Each time you staircase, you’ll need to pay for legal fees and a property valuation, which can add up over time.

Pros and Cons of Shared Ownership

Shared Ownership is a popular option for many first-time buyers, but it does come with its advantages and disadvantages. Let’s explore both sides of this scheme to give you a clear understanding.

Pros:

Affordable Entry Point: One of the most attractive aspects of Shared Ownership is the lower deposit requirement. As you’re only buying a share of the property, the deposit is calculated based on that percentage, rather than the full value of the home. This makes it easier to step onto the property ladder without needing large upfront savings.
Reduced Rent: The rent you pay on the portion of the property you don’t own is usually less than standard market rent. This keeps overall housing costs lower, even as you’re working towards eventual full ownership.
Opportunity to Buy More Shares: Over time, you have the option to increase your ownership of the property through staircasing. This gradual increase allows you to gain full ownership at a pace that suits your financial situation.
Long-Term Investment: The ability to own 100% of the property eventually means that Shared Ownership isn’t just about renting with some equity. Over the long term, you can fully own the property and benefit from any potential increase in the property’s value.

Cons:

Staircasing Costs: While staircasing allows you to own more of your home, each time you buy more shares, you’ll need to cover the associated costs. These include legal fees, property valuations, and sometimes mortgage arrangement fees, making staircasing an expensive process.
Restrictions on Selling: If you decide to sell, housing associations often have the right of first refusal, which means they have the option to buy your share or nominate a buyer. This can make selling a Shared Ownership property more complicated than a fully owned one.
Full Responsibility for Maintenance: Even if you only own a portion of the property, you’re still responsible for the full cost of maintaining the home. This includes repairs, renovations, and any service charges, which can add significant costs.

Potential for High Monthly Payments: In some cases, the combined mortgage payments and rent can be higher than expected. If property prices rise, your rent on the unsold portion could increase too, adding pressure to your monthly budget.

Available Lenders for Shared Ownership Mortgages

When it comes to Shared Ownership mortgages, not every lender offers the same products as for standard mortgages. However, several high street and specialist lenders provide tailored mortgage options. It’s essential to choose a lender familiar with Shared Ownership and its specific requirements.

Here are some popular lenders that offer Shared Ownership mortgages:

Nationwide: As one of the biggest lenders in the UK, Nationwide offers competitive rates for Shared Ownership buyers and allows staircasing up to 100% ownership.
Leeds Building Society: They offer flexible mortgage deals, including products that cater specifically to Shared Ownership borrowers, with both fixed-rate and variable-rate options available.
Halifax: Halifax offers Shared Ownership mortgages that allow you to staircase, and they have a variety of mortgage deals tailored for first-time buyers.
Santander: Known for its reliability, Santander offers Shared Ownership mortgages with attractive terms and manageable monthly payments.
Barclays: Barclays is another well-established lender that provides Shared Ownership mortgages with competitive interest rates and staircasing options.

Many lenders offer flexible terms and rates for Shared Ownership mortgages, but it’s often beneficial to consult a mortgage broker to help find the best deal tailored to your individual circumstances.

Shared Ownership Mortgage Rates

Mortgage rates for Shared Ownership properties vary depending on the lender and the type of deal you opt for. Just like with standard mortgages, rates can be either fixed or variable.

Fixed-Rate Mortgages: These provide the security of knowing that your monthly mortgage payments will remain the same for a set period, typically two to five years. This option is popular with first-time buyers who need to budget carefully.
Variable-Rate Mortgages: These mortgages have interest rates that fluctuate with the market, meaning your payments could rise or fall over time. While variable rates can sometimes start lower than fixed rates, they carry more risk due to the possibility of rate increases.

Lenders will assess your financial situation, credit score, and the percentage of the property you’re purchasing when determining the interest rate. Shared Ownership mortgages are generally competitive, though rates may be slightly higher than for standard mortgages due to the additional complexities involved.

How to Remortgage a Shared Ownership Property

Remortgaging a Shared Ownership property is an option if you want to:

Secure a better interest rate.
Borrow more money to staircase and buy additional shares.
Reduce your monthly payments by extending the mortgage term or switching to a more competitive product.

Steps to remortgaging:

Get a Valuation: Before remortgaging, you’ll need to get the property valued to determine its current market worth. This helps calculate how much equity you own and how much you’ll need to borrow if you want to staircase.
Speak to a Specialist Broker: Remortgaging a Shared Ownership property can be more complex than a standard property, so it’s wise to use a mortgage broker familiar with the process.
Shop Around for Deals: Look for lenders that offer competitive remortgage rates, ensuring they allow for staircasing if that’s your goal.
Pay off the Old Mortgage: Once you secure a new mortgage, it will pay off the remaining balance of your old loan, and you’ll start making payments to the new lender.
Complete Legal Work: Similar to when you first bought the property, you’ll need a solicitor to handle the legal side of remortgaging.

FAQs

1) What is Shared Ownership?

It’s a part-buy, part-rent scheme. You purchase a share of a home (typically 10%–75%) with a mortgage and pay subsidised rent on the remaining share to a housing association.

2) Who is eligible?

Usually UK residents with household income caps (often £80k outside London / £90k in London), first-time buyers or those who can’t afford a suitable home on the open market. Some priority groups may apply. Lender and housing-association rules both apply.

3) How much deposit do I need?

Deposits are based on the share you purchase, not the full property value. Many lenders accept 5–10% of your share (subject to credit and scheme rules).

4) How do the monthly costs work?

your mortgage repayment on the share you own,

rent on the unowned share, and

service charges/ground rent (leasehold), plus any estate charges.

5) Can I buy more shares later (staircasing)?

Yes. You can usually buy additional shares up to 100% (some schemes cap this). Valuations and legal costs apply each time you staircase.

6) Are Shared Ownership mortgages only for new builds?

No. You can buy new build or resale Shared Ownership properties. Resales are existing SO homes being sold by current shared owners.

Ready to make Shared Ownership work for you?

Mortgage Knight packages Shared Ownership applications every day—from first-time buyers to contractors and the self-employed. We’ll confirm your budget, secure a soft-search AIP where available, and match you with a lender that understands Shared Ownership leases and staircasing.