Shabby Chic Boho Getting on the property ladder is harder than ever with housing prices climbing to astronomical heights. For a lot of first-time buyers, the dream of owning that first home seems like an impossible dream. However, what if you didn’t have to buy the whole property? Shared ownership is an often overlooked way of affording your first home – but there are major considerations you must look out for.
#1 Responsibilities
You get a lot more flexibility compared to straight-up renting when it comes to shared ownership. If you want, you could replace the floors, paint the walls and hang up pictures if you felt like it. However, when it comes to wanting pets you’d still have to ask permission – so not so great if you’re looking to move into a shared ownership property that doesn’t allow pets if you’ve got one already.
Another downside is that you are in charge of all the damage and repairs. If the cooker breaks, you’re the one who has to get it fixed or replaced. Everything that’s internal to the property, that’s your responsibility to get sorted.
#2 Affordability
If you can’t get a big deposit but you can afford monthly payments, then shared ownership might work well for you. You’ll still need a small deposit and to have a mortgage on the share of the property you are paying for, so yes, this involves passing all the usual mortgage affordability requirements. On top of that, you have to pay rent monthly on the part of the property you don’t own. It can be tricky working out how much it’ll all cost so using a shared ownership calculator can help you figure out what you can afford.
#3 Costs
On top of your deposit, mortgage and rent, there are some other costs that you can expect to pay. Shared ownership homes are leasehold, meaning that you can own a property (or a share of it) but not the land it’s on. Often, leasehold properties come with additional costs like service charges. Service charges often cover things like maintenance to common areas or outside of the property. It’s usually a monthly cost, but it can set you back £100s or even £1000s.
#4 Eligibility
Not everyone can apply for a shared ownership home. There are specific criteria you have to meet in order to be considered. You don’t have to be a first-time buyer; it’s open to anyone struggling to get back on the property ladder and even people who already are living in shared ownership homes. To be eligible, your income must be under £80,000 a year unless you’re in London, which rises to £90,000. The same goes for joint buyers; they both must earn under £80,000 to apply. The criteria does depend on the type of property location, and just because you earn under the required amount, you still have to pass all the other checks.
Shared ownership does help you to save you money upfront by reducing the amount you’d need for a deposit, so it might be good for you if that’s what’s limiting your ability to buy. However, there are a lot of additional costs and limitations with buying via shared ownership that you should really think about and consider before making any decisions.
