Shared Ownership blog from MD of Metro Finance, Jon Lord.
I’ve seen many happy First time buyers get their foot on the property ladder with Shared Ownership and then grow their share over the years, until the day they own the full 100%
When we see so many of our First Time Buyers purchasing in this way, you know Shared Ownership is the king of affordable home ownership products, it works so well and it works because it is the ‘most’ affordable, most flexible home buying product. I’ll explain why;
Day 1 – Let’s say you don’t go for the minimum 25% share and can afford to buy at 50%. This means that on a property value of £150,000 you’d be buying a £75,000 share so would need a deposit of £3750 which is 5% of the share.
You’d find yourself a friendly yet specialist mortgage advice firm (Like Metro) and of course a solicitor, get these two right and everything should be plain sailing to your first home. On a note of caution, get these two wrong by choosing non specialists and it could be a stormy and long journey to your new home!
Two years later – The fixed rate on your first Shared ownership mortgage has just expired, right now would be a time to think ‘Shall I buy some more shares in my home’ or even ‘Shall I buy the final shares in my home’
If you take the next step and buy more, the next jump might be to 75%, just imagine if your property had increased in value to £158,000, this would mean you could staircase (buy more shares) to 75% without putting any cash into the transaction. This is possible because the mortgage lender recognises the equity you have built up over the 2 years of ownership.
It might not happen this fast or it may happen even faster but you get the picture, the rising property values have the downside of making it harder to buy your first home but they also have the positive effect of helping you staircase without having to save more money.
So, Shared Ownership – You can buy with smaller deposits than any other Affordable Home Product. You can buy from 25% AND the rising property values that you thought might stop you buying, could actually help you buy 100% of your home in the longer term.
MD of Metro Finance, Jon Lord - www.metrofinance.co.uk