Mortgage Information - Shared Ownership

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How to Buy

Set out below are the steps that you will need to take, to purchase a shared ownership home.

Step 1
Apply to the Social Landlord who will send you details of the schemes available and an application pack.

Step 2
If the landlord deems you to be a suitable applicant the next step is to meet them to discuss your application, view the property and establish the price. The purchase price is based on an independent qualified valuer's valuation. If you decide you want to proceed you will need to agree the size of the share you wish to purchase.

Step 3
The next step is to arrange a mortgage. If you already have a bank or building society you save with, it is best to approach them first. Should the bank or building society request a copy of the lease, the landlord can send them one. In some instances the Social Landlord may be able to help to arrange a mortgage for you.

Step 4
Once you have received a mortgage offer, you will need to give the name and address of your solicitor/licensed conveyancer to the Social Landlord. A draft copy of the lease will then be sent to your solicitor for approval. He will also carry out local authority searches and investigate the title of the property. At this time the Social Landlord will also inform you how much rent and service charge (an amount which generally goes into a "sinking fund" to cover repairs and maintenance to the property) you will be expected to pay on the unsold share. The purchase will then be formally completed.

Your lender will also require you to insure the property against fire and other damage i.e. buildings insurance. Some Housing Associations include this insurance cover in their service charge, this is something you will need to check. You will, however, need to arrange contents insurance and it would also be worth considering life insurance and payment protection insurance to ensure that should anything happen to you or you were to lose your job, your dependents would receive some income and the mortgage would be paid off.

Step 5
At a future date you may wish to purchase further shares in your property. You must advise your Social Landlord in writing of your wish and they will arrange to have the property valued. You will be responsible for paying the valuer's fee. Once the valuation has been received, you should be given 3 months in which to arrange a mortgage and complete the purchase.

An interesting feature of shared ownership is that it can, in some instances, help you avoid having to pay stamp duty. If the property you are buying is worth £120,000 or less and you are providing 50% of the finance, then your share will be below the level at which stamp duty is charged. If at a later date you increase or "staircase" your share by multiples of 25%, you will still avoid paying stamp duty on each occasion, the only time that this would not be the case is if the property doubled in value.

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