Your home may be repossessed if you do not keep up repayments on your mortgage.
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But what are shared equity mortgages? And how do you find the best shared ownership mortgage lenders and deals?
When you buy a shared ownership property you buy a percentage stake in the property. This is normally around 25 to 50 per cent. You then typically pay a monthly rent to a housing association for the remaining 'share' of the property.
You can generally then buy additional portions of the property at a later date (this is called 'staircasing').
These schemes are popular with first time buyers as it means you can buy part of a home even if you don't have a large income or a big deposit.
To buy such a property you can take out a shared ownership mortgage. The interest rates, fees and criteria for these loans vary from lender to lender and so it's important to shop around before signing up for a deal.
There are lots of shared ownership mortgage providers in the market and so it is worth undertaking some research before you agree to a deal.
When you compare mortgages it is important to take the following factors into account:
Even if you're only buying/borrowing 50 per cent of the property's value you may still have to put a 5-10 per cent deposit down depending on the lender.
The rent that you pay to the housing association will generally be classed as a commitment when a lender calculates the mortgage amount they are prepared to offer. When looking at income multiples you should take this into account.
Many major lenders offer shared equity mortgages but not all.
Make sure you carefully research all the shared ownership mortgage deals on the market to find the right part buy part rent mortgage for you.
Take into account the fees and charges you'll need to pay as well as the rate of interest you'll be charged, and remember to check how flexible the mortgage is i.e. whether you can make overpayments, move the mortgage if you move property, and take a mortgage holiday if you need to.
Comparing shared ownership mortgages online is the easiest way to see which lenders offer the most suitable deal for you.
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