We've asked our friends at Share to Buy to help dispel some of the myths that surround Shared Ownership as an affordable homeownership product for first time buyers:
As the leading property portal for Shared Ownership homes, and hosts of the London Home Show, we at Share to Buy have heard every misconception surrounding the part buy/part rent scheme. From confusion over the buying process and worries about what you can do with your home, to fears over whether you’ll be able to buy more shares or sell your property.
To ease the concerns of all you budding buyers, and to help you make an informed decision on your journey to homeownership, we’ve busted some of the biggest myths surrounding the Shared Ownership scheme!
I can’t afford a deposit on the open market - Shared Ownership will be the same.
One of the best things about buying a Shared Ownership home is that the deposits are usually much smaller than buying on the open market. With Shared Ownership, you’ll generally need to raise as little as a 5% deposit of the share you’re purchasing, not for the full value of the property.
For example, if you want to buy a 25% share of a £350,000 home, your share will equate to £87,500 – that means that a 5% deposit would be just £4,375!
I won’t be able to afford both rent and a mortgage.
With Shared Ownership, you only pay a mortgage on the percentage share that you own and a subsidised rent on the remainder to a housing association such as Peabody.
In many cases, the monthly payments for a Shared Ownership home can be less than renting privately. Plus, if you go on to buy more shares in your home, your mortgage payments will actually increase while your rent will decrease in turn.
I don’t want to share my home with a stranger.
You don’t have to buy or share your home with anyone that you don’t want to! The ‘shared’ in Shared Ownership actually refers to the fact that you’re sharing ownership with the housing association to who you pay your rent.
Whether you’re looking to buy a family home with your partner, a pad with your best pal or an apartment all to yourself – you can do it all through Shared Ownership.
I can’t buy through Shared Ownership – it’s only available to first time buyers.
Shared Ownership may often seem aimed at first time buyers who are looking to take that first step onto the property ladder but it’s actually available to all different types of purchasers. As long as you meet the necessary eligibility criteria – such as being over the age of 18, have a household income of under £90,000 in London (or under £80,000 outside of the capital), and you don’t currently own another home – then Shared Ownership could still be an option for you!
I love where I live, I don’t want to move miles away.
It’s a common myth that Shared Ownership homes are only available in run-down locations or on the furthest outskirts of popular neighbourhoods but that couldn’t be further from the truth! Peabody, for example, offer Shared Ownership homes in some of London’s most desirable locations, including Greenwich, Wembley, Hackney and Islington.
With so many providers offering all different types of homes across the capital and beyond, there’s never been a better time to find a home in an area where you really want to live!
If I’m only buying a share, I’ll never be able to get a mortgage.
That simply isn’t the case – there are more and more lenders offering Shared Ownership mortgage options all the time! However, it’s worth noting that all mortgage lending is calculated in pretty much the same way. Regardless of whether you’re buying through Shared Ownership or on the open market, it all comes down to your income, outgoings, credit rating and the size of your deposit.
I’d still be paying rent so I can’t decorate my own home.
Whether you want to want to hang some of your favourite artwork or paint every room neon green - being able to put that personal touch into your abode is one of the biggest joys of owning your home, and you can do exactly that in a Shared Ownership property.
The only time when you’d need to get permission from your housing association is if you’re looking to make any structural improvements to your home, such as fitting a whole new kitchen or building a driveway!
There’s no future in a Shared Ownership home.
Knowing your next steps is an important part of buying a Shared Ownership home as there will be a different route to suit each buyer.
You can choose to buy more shares in your home through a process known as staircasing, and, in most instances, you can go on to buy 100% of your property and become the outright owner. In this instance, you’d no longer pay any rent, you’d only pay your mortgage.
For owners who would prefer to sell their homes, they can do so at any point. As outlined in the terms of your lease, your housing provider will generally have a set period of time to try and sell the home on your behalf – with Peabody, that’s 8 weeks. If they don’t manage to sell your home within that time, you can take over control and look to sell privately or through an estate agent of your choice!
Looking for a Shared Ownership home?
Peabody is one of the largest housing associations in the Uk with a selection of Shared Ownership homes available throughout London and the South East. Take a look at our property search to find the perfect home for you.Find a Shared Ownership home