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Shared Ownership Mortgages: What are they and where are they available?

Updated on June 4, 2011
Image by nikcname (via Flickr)
Image by nikcname (via Flickr)

What is a shared ownership mortgage?

There are many different kinds of mortgages available to home buyers, and you may come across this special type of financial product while you're searching. Shared ownership mortgages are complicated, but they can be very useful for a specific type of borrower.

First off, these mortgages are generally available in the UK only. If you're an American, these really don't seem to be available to you. It can be very difficult to figure that out if you're searching the internet.

The basic idea of a shared ownership mortgage is that you are partially own and partially rent a property. This can be good for home buyers that don't have enough money to finance a full property. In addition to your regular monthly mortgage payment (for your share of the property) you will also pay the lender or the government a rental payment (for their share). If you choose to sell the property, they will share in the proceeds of the sale.

While you are in the house, you are generally given a 99 year window in which you can buy shares from the lender or government, thereby increasing your equity in the property.

Because this helps home buyers purchase a more expensive house than they could ordinarily afford, it is very difficult to secure these loans. There is a lot of competition and not much supply.

There are several places that you can look if you are a UK citizen and you're interested in learning more about this product. The Housing Corporation is a government agency that will help you find developers that take part in shared ownership mortgage schemes. Again, because of the popularity of these products, there is a good chance that you'll have to queue up to get your hands on one.

Typically, a first time home buyer will take a share between 25 and 50% of the total equity in the house.

Shared Ownership Mortgage Video

The video above quickly discusses how shared ownership works in the UK.

Do you have more questions about shared ownership mortgages?  Be sure to ask questions in the comment section below to find out more about this unique mortgage option.  Thanks for reading!


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    • The Simple Guide profile image

      The Simple Guide 6 years ago from Eastbourne East Sussex. UK

      I take it you are an American as the above hub is peppered with miss information.

      1. You do not pay rent to the government

      2. There are schemes where no rent is paid

      3. You need to qualify for them not que up

      I also feel you need to check the sites you are linking to, the information on one is giving bad advice, it says that if one party to any purchase has a poor credit score it doesn't matter. Simply not true