Buying a shared ownership home enables you to buy a home to suit your needs by purchasing a share of the property and paying a subsidised rent on the part you do not own.

Depending on the scheme and personal circumstances:

The purchaser can buy a share of the property e.g. 25%, 50% or 75% and is generally financed by a mortgage available from a high street lender or specialist mortgage lender.

A subsidised rent is payable to the housing association for the share of the property which you do not own. For example if you buy a 30% share, then you will pay 70% of the rent which the housing association would normally charge for the whole property.

Once you have moved in and you can afford to buy a larger share in the property e.g. 10%, 25% then in most cases you can keep doing so until you own 100% of the property outright - this is known as ‘staircasing’.

On average you will need a minimum income of £15,000 per annum to be able to afford a shared ownership home, although this will vary depending on the housing association scheme.

The benefit of buying a shared ownership home means that your monthly mortgage and rent payments are affordable, the cost can be less than renting and it also means you will have a capital stake in your home which may increase.

Here is an example of how much a shared ownership mortgage could cost.
Please note these figures are a guide to illustrate the potential costs and will vary according to the circumstances of your purchase.

A three bedroom house has a full market value of £225,000.

If you were to purchase 35% or 50% of the property your monthly payments would be as follows:

Percentage Purchased 35%
Mortgage (approx 5% interest on repayment mortgage) £540.00
Rent £243.75
Total £783.75

Percentage Purchased 50%
Mortgage (approx 5% interest on repayment mortgage) £708.00
Rent £187.50
Total £895.50

Other costs to factor into buying a shared ownership property:

Service charge - between £25.00 - £120.000 per month depending on the property type.

Expenses - approximately £3,000 to cover legal costs, fees, surveys and so on (these will vary depending on the size of the property).

Mortgage deposit - when applying for a mortgage some lenders prefer a 10% to 20% deposit.

Furnishings - consider how much money will be required to furnish a new property.

If you are still looking for an affordable home or have more questions on buying a shared ownership property, please go to the number one website for affordable homes http://www.smartshare.co.uk/frequently-asked-questions-about-affordable-...