Shared Ownership Homes

For some of us breaking into the housing market can be a difficult task especially given how house prices are falling and lenders are more reluctant to grant mortgages following the so-called ‘credit crunch’.

With this in mind we look at Shared Ownership Homes, a way in which to own part of a home – at least initially - and get a foothold on the property ladder.

What is Shared Ownership?

Shared Ownership is when two or more people own a home and have applied for a mortgage together. Mostly shared ownership is two people, usually partners, who have applied for a mortgage to buy the property together on the understanding that if one or the other decides to sell then he or she must seek the approval of the other partner and also must give them first refusal on the purchasing of their half.

Applying for a Mortgage Together

Many mortgage lenders favour joint applications for a mortgage as this spreads the risk should anything go wrong. However you must still go through the procedures of applying for a mortgage in the same way if you were applying as a single mortgage borrower.

When applying for any mortgage the mortgage lender will ask for details of your expenditure i.e.: how much money do you have coming in jointly, how much money is going out, do you have any adverse credit and are you both in full time employment?

If either one of you is unemployed then this may cause a problem and the mortgage lender may suggest a single applicant mortgage. However if you are both in full time employment and have no adverse credit the likelihood of your being accepted for a mortgage is greatly increased.

Buying a House Together

Buying a house together can be as daunting as if you were buying a house on your own so it is important to take all important decisions together and to be in agreement. If you both cannot agree on a way forward then it is best to go back to the drawing board as it were and try to come up with other solutions. It is important to consider how stressful buying a house can be and whether or not it is something you really want to do.

If you need advice and support, especially where mortgages are concerned, it may be worth employing the services of a solicitor or financial advisor who specialises in such things. He or she can help you with your mortgage application and also with the exchanging and signing of contracts.

Right to Buy for Shared Ownership

If you and your partner have shared a Housing Association or council home together then you may be eligible to buy the property if you have resided there for five years or more. You will be notified by the Housing Association or council if you have lived in the property for five years or alternatively you can apply in the last six months of year four of your tenancy. Again it is worth noting that if you cannot afford the buy the property outright you may be able to enter into a Rent to Buy scheme; this means that as partners you can purchase one half and rent the other whilst trying to raise the capital to buy the other half as well.

Further Information

As always it is a good idea to consult with a financial advisor or solicitor specialising in house buying before entering into any mortgage agreements. You should spend time considering all of your options before making a final decision and it is important also to take the time to consider your finances carefully before applying for a mortgage.