What Deposit do I need for Shared Ownership?
Buying a shared ownership property means that you’ll need a different type of mortgage, and typically you can look to pay from 5% upwards on your deposit. Your deposit will be on your share of the property, not the full value.
That would mean that on a property like Leon House where your minimum share starts at 25% your 5% deposit would work out at just under £4,000 (£3,968.75).
How does Share of the Property impact Affordability for Shared Ownership?
The larger your share of the property, the higher your deposit and therefore estimated savings required will be. The higher your share in the property, the more scrutiny there will be on the household income, and the weight in mortgage Vs rent repayments will change.
What is the Shared Ownership Mortgage Term?
Our calculator runs off the term of 25 years at a 4% interest rate. The length of your term can be adjusted, and will therefore affect monthly repayments. It’s down to your mortgage lender to scrutinise the loan-to-value (LTV), which can also affect repayments within your term.
What are the mortgage Interest Rates on Shared Ownership?
Your mortgage interest rates will depend on your mortgage lender. Most shared ownership mortgages will begin with a lower initial rate before moving onto their subsequent rate.
From what we’ve seen, initial rates can vary from 1.46% to 2.19% (for two years) before their subsequent rate sits between 3.54% – 3.59%. After the initial rate, most shared ownership mortgages are consistently within that margin.
What Household income Do I need for Shared Ownership?
Like any mortgage, the estimated income you’ll need will change depending on your share value, deposit, and other factors.
However, unlike a standard mortgage, your household income will have to be below £80,000, or £90,000 if you live in London.
How Much are Shared Ownership Monthly Repayments?
Shared ownership monthly repayments comprise both your mortgage repayments and the remaining rent payments.
To give an example, if you had a property with a value of £220,000, with a mortgage interest rate of 3.54% with a 40% share over 25 years and you could manage a 10% deposit (£8,800) your monthly mortgage payment would be £398.19 and your rent would be £302.50.
Therefore, your overall monthly payment would be £700.69. As you can see, there are a lot of variables that determine your repayments. These are:
- Property value
- Shared ownership mortgage interest rate
- Deposit amount
- Mortgage value
- Term (25+ years)