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Friday 10 November 2023

How I navigated shared ownership and now own my house

How Shared Ownership allowed me to buy my first home in the UK

Owning a home is a dream many of us share, but with skyrocketing property prices, it often feels like an unattainable goal. Enter shared ownership, a game-changer for those looking to step onto the property ladder without breaking the bank. I've written my Shared ownership story before but I've now completed on the final shares and I'm no longer in a shared ownership property I own the house so I wanted to do a mini update post on just how we did it
Yellow and green front doors

Understanding shared ownership

Shared ownership is like having your homeownership cake and eating it too. Instead of buying the entire property outright, you purchase a share – typically between 25% and 75% – and pay rent on the remaining portion. This means you'll need a smaller deposit and a more manageable mortgage. Ideal, right?

It meant that in the life situation I was in I was able to buy a house on my own using a shared ownership programme, get my foot on the ladder with a five year fixed term mortgage with the goal being to be in a financial situation to staircase at that point - which we did!

Deposits in Shared Ownership

Let's talk numbers. One of the perks of shared ownership is the reduced deposit. Traditional home buying usually demands a hefty down payment, but with shared ownership, you can often secure a home with a deposit as low as 5-10% of your share. This financial breather makes homeownership a tangible goal for many who thought it was out of reach. My personal situation meant my initial deposit and financial outlay was around the £10k mark, and by the time we staircased we'd built enough equity in the property to not require another deposit

Mortgage Matters

Getting a mortgage for shared ownership is a bit different from the usual process. You secure a mortgage for your share and pay a subsidised rent on the remaining share. Over time, you can gradually increase your ownership by buying additional shares through a process called "staircasing." This flexibility allows you to adapt your homeownership journey to your financial situation.

When I began the process I used a mortgage calculator to factor in all of the costs and plan for the future. I used the calculator again recently when staircasing to ensure the new changes and mortgage rates were affordable

While the reduced upfront costs are appealing, it's essential to factor in ongoing expenses. In addition to your mortgage, you'll pay a service charge covering maintenance and communal areas. It's crucial to budget for these costs to avoid any unexpected financial hiccups. My personal recommendation is to only use shared ownership on a house not a flat, as communal areas and extra charges grow much quicker in a building used by many people. Now I've staircased my 'service charge' is pocket change each month 

Is Shared Ownership Right for You?

Shared ownership is not a one-size-fits-all solution. It's worth considering your future plans – are you looking for a long-term home, or is this a stepping stone to full ownership? Additionally, be aware that shared ownership properties are often leasehold, so check the terms and conditions.

I've read some horror stories but I think that comes with the territory of buying a house. As long as you do your research into the agency and understand the process. This is further reason why I'd only recommend this process for a house. If you staircase 100% on a flat it's likely to remain leasehold whereas with a house if you've read your terms etc. some transfer to a freehold.

Final Thoughts

My life now in comparison to 2018 is a million miles away! I was single and not in a financial position to buy a house on my own due to the property market. Shared Ownership was a lifeline to provide me the opportunity I wanted. Fastforward five years and I'm married with a little boy, it also means there are two incomes going into our home which meant we were in a much more viable position to buy the remaining shares.

Shared ownership is a fantastic option for those itching to break free from the renting cycle. With lower upfront costs and a step-by-step approach to full ownership, it's an accessible path to having a place to call your own.

I feel incredibly lucky that this little new build I stepped into five years ago is now full of all of the memories of our love and marriage and the place my boy is growing up. Shared ownership might not be for everyone, and it certainly has some flaws but for me it has given me everything I wanted.

Have you considered shared ownership?

Pink wall and door keys

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