A similar mortgage scheme to shared equity, the difference being that the third party receives monthly rental from the borrower in respect of their share in a property and does not therefore share in any future increase in the property value.
Shared Ownership Mortgage schemes are used for part buy, part rent schemes commonly known as shared ownership. These types of mortgage scheme are popular with first-time buyers because they only need to find a fraction of the deposit.
When you buy a shared ownership property, you only buy a percentage stake in the property, usually 25 to 50 per cent – from a housing association. Although this can be affordable, as you only own a percentage of the property you will miss out on some of the equity growth if the housing market rises. You can, however, staircase‘which means buying another portion of the property later on.
Many of these shared ownership schemes, which often offer properties at a discount, are open to all comers through housing associations. Shared ownership mortgage schemes vary from lender to lender with some lending up to 100% loan to value on the purchased share.