Making it on to the property ladder is more of a challenge than ever, and across the UK prospective homeowners are looking for new ways to make the jump. This makes it no surprise as to why shared-ownership properties are booming in popularity across the country, with an increase of 14% of shared ownership homes delivered when compared with last year.
Because of this, Banks across the country are offering shared ownership mortgages, whereby you can buy anywhere from 10% to 75% of the property value with a mortgage and pay rent on the rest of the property as per shared ownership.
We spoke to Paul Mcarthy, National Key Account Manager from Santander, on their shared ownership mortgages, benefits and why they could be right for you:
1 What made Santander choose to offer shared ownership mortgages?
Offering Shared Ownership Mortgages are a great way to support first time buyers and to give another option for customers looking to purchase a home in higher priced areas. Interestingly, many of the customers we support through shared ownership mortgages are single borrowers so this type of mortgage can help with their affordability.
2 What should customers consider before applying for a shared ownership mortgage?
As with any mortgage application the first thing for customers to do is their research, make sure you understand your options, what your property purchase budget may be and get a good idea of your monthly repayments. There are lots of tools out there as you start your research, including on the Santander website, and when you have decided to buy, seeking independent mortgage advice is a great way to get a full picture of the range of products available.
For a Shared Ownership Mortgage specifically, there are some eligibility requirements which you will need to meet before applying. These include maximum income thresholds, minimum deposit amounts and only certain types of buyers can apply such as first time buyers or those forming a new household. You can check if you are eligible by speaking to your mortgage advisor, lender or by using the interactive tool on the Government’s information pages.
3 Why should customers come to Santander for their shared ownership mortgage?
We are delighted to be able to support home purchases through Shared Ownership Mortgages. We apply our standard lending policy and affordability for Shared Ownership applications and customers can choose from our standard product range, resulting in more choice than some other lenders via this scheme.
4 How do Shared Ownership Mortgages work and how are they different to a standard mortgage?
The Shared Ownership scheme allows customers to part-own, part rent a property. When a customer first moves in, they buy a share of the home using a combination of a deposit and a mortgage. The rest of the property is rented. The customer has the option to purchase additional shares in the property to increase their stake and this process is called ‘staircasing’. The rent the customer pays reduces in line with any increased share purchased in the property.
While rent is due alongside mortgage payments this scheme can be helpful for customers with smaller deposits or and can help customers access a more expensive property. Of course with any mortgage the right product depends on individual circumstances so its always important to do your research and speak to an expert to find the right option for you.
More information about Santander’s support for those starting their home ownership journey is available on their website, be sure to check it out for anyone surveying their options when looking into shared ownership housing.