Myth Busters: Getting a Shared Ownership Mortgage is Harder than a Traditional Mortgage

When people first hear about Shared Ownership, one of the common concerns is that getting a mortgage for this type of property might be more complicated than a traditional mortgage. It’s understandable—Shared Ownership isn’t as widely discussed as buying a home outright, so there’s some confusion around how the process works.

Let’s clear that up! While there are a few key differences, getting a Shared Ownership mortgage is no more difficult than securing a standard mortgage. In fact, with more lenders offering tailored products, it can be a smooth and straightforward journey to owning your own home.

According to the Home Owners Alliance, there are a range of high street lenders who provide shared ownership mortgages, as well as smaller specialist providers.

It’s Not Harder—Just a Little Different

The idea that Shared Ownership mortgages are more difficult is simply a myth. Yes, the process has its own unique steps, but that doesn’t mean it’s more complex. Rightmove recently reported that shared ownership properties take on average 56 days to sell versus 65 days for all other properties, as of March 2024.

One of the key differences is that, with Shared Ownership, you’re getting a mortgage on a percentage of the property—anywhere between 10% and 75%—not the full market value. This often makes the loan amount smaller, which can be an advantage. Plus, many banks and specialist lenders offer products designed specifically for Shared Ownership buyers, so you’re not limited in your options.

The Home Owners Alliance reports that it’s a good idea to contact a fee-free specialist mortgage broker for advice. Love Living Homes works with a panel of mortgage brokers who can offer their services, and advise you on your mortgage options, just contact us!

How a Shared Ownership Mortgage Works

Here’s a simple breakdown of how the process works:

What’s Different About a Shared Ownership Mortgage?

According to Savills market report The average first time buyers used a deposit of 24%, equivalent to £71,000 for a £300,000 home. While Shared Ownership mortgages are similar to traditional ones, there are a few key differences:

• Smaller Loan: Since you’re only buying a percentage of the property, your mortgage is smaller. This can be a big advantage for first-time buyers or those with a limited deposit.
• Rent on the Remaining Share: In addition to your mortgage payment, you’ll pay rent on the portion of the property you don’t own. But don’t worry—this rent is typically below market rates; however they are subject to price increases every year and the amount will vary according to your lease. Remember to factor the increases in.

Specialised Products for Shared Ownership

The good news is that many lenders now offer mortgage products specifically designed for Shared Ownership. These products cater to the unique needs of Shared Ownership buyers, often offering competitive rates and terms similar to traditional mortgages. Plus, working with a mortgage advisor who understands Shared Ownership can make the process even easier.

Moneysupermarket.com has a comprehensive guide to shared ownership mortgages, and reports that current available lenders include:

• Barclays
• Halifax
• Leeds Building Society
• Lloyds
• Nationwide
• Newbury Building Society
• Santander
• Skipton Building Society
• TSB
• Virgin Money.

(correct at time of publishing)

This list isn’t exhaustive and not all lenders may be available to you subject to your level of deposit and credit score.

To help you find the right mortgage for you, Love Living Homes can recommend mortgage advisors that specialise in Shared Ownership. They will require an initial assessment to be done through a panel mortgage advisor, but you’re free to use your own advisor once that’s complete. Always check if there are any fees involved and get upfront quotes before you proceed.

How We Can Help You Through the Process

Love Living Homes is here to help you navigate the Shared Ownership mortgage process with ease. We’ll guide you through finding suitable lenders, understanding financial requirements, and budgeting for total monthly costs, including your mortgage, rent, and any service charges.

Debunking the Myth

The myth that Shared Ownership mortgages are harder to get is just that—a myth. In fact, many buyers find that, due to the smaller loan size and lower deposit requirements, Shared Ownership mortgages can be more manageable. And with plenty of tailored products available, the process is designed to be accessible.

While the process of getting a Shared Ownership mortgage is slightly different, it’s not more difficult than securing a traditional mortgage. With so many lenders offering tailored products and plenty of support available, there’s no reason to hesitate.

If you’re ready to start your Shared Ownership journey, contact us today to find out how we can help you get a mortgage and secure your dream home!