Can’t afford your own house? Well, shared ownership and ‘staircasing’ could be the answer to your problem according to moneyfacts.co.uk
Young people today are only too well aware of the difficulty of getting that first foot on the property ladder and with prices continually rising and wages in the doldrums many people have become resigned to the dream of home ownership remaining just a dream.
“But what if there was another way to own bricks and mortar without having to stump up the whole of the deposit yourself?” challenges the site.
It offers shared ownership as one possible answer to the problem.
Shared ownership is a scheme where you buy just some of the property and not the whole thing at one go. It is a partnership between the buyer and a housing association where the buyer can choose how much of the total cost they can afford.
Typical values run from 25% of the total purchase price to 75% with an agreement to pay the association an affordable rent on the portion you don’t own.
Obviously you will still need to get a mortgage for your share of the property, but because you are only buying a part share of the property the amount borrowed will be more affordable and the required deposit smaller.
The amount of rent payable varies with the housing association involved, but is typically around 3% of the association’s share of the property.
For example, if you buy 40% of a £150,000 house you would own £60,000 and the association would own £90,000. A rent of 3% on that figure comes to £2,700 a year or £225 a month which you would be paying on top of your mortgage.
The size of mortgage payment will depend on how much of a deposit you put down and the rate your lender charges.
Staircasing is the name given to the process of buying more of your home in stages as you become better able to afford it.
The process allows you to buy more of a share of your home and will be based on the value of the house at the time the application is made. The minimum is 10% and the maximum number of steps is three. Some associations expect the last step to be the complete purchase of the house.
A shared ownership home can be sold like any other, but the housing association has the right to buy it first (known as first refusal) and to find a buyer.
However, if you own 100% of the house you’re free to sell it in any way you like.