| Shared Ownership Properties | Shared Ownership Mortgages | Getting Started |
In association with:
Shared Equity
An introduction to shared equity from Share to buy ltd
Shared equity is similar to shared ownership: it is a form of affordable housing to help first time buyers, key workers and others on to the property ladder. However, there are important differences between shared equity (sometimes known as 'equity loans') and the main shared ownership scheme, part buy part rent. The Government has a specific shared equity scheme of its own called FirstBuy, previously known in a slightly different form as Homebuy Direct.
FirstBuy - the main shared equity scheme
FirstBuy (formally HomeBuy Direct, a similar equity loan product) is the main shared equity scheme under the Government's 'homebuy' umbrella of various affordable housing products. Under the homebuy direct form of shared equity you were able to buy a new build property with an equity loan, typically for 30%, provided half and half by the Government and a builder. With FirstBuy, the arrangement is similar but the maximum equity loan is 20%. However, taken together with the customer's own deposit of just 5%, this still gives total equity of 25% and means that the buyer can access potentially attractive 75% loan to value mortgages despite putting down a small deposit. There are also shared equity schemes where the Government is not involved where, for example, the developer provides all of the equity loan for the share you do not initially purchase. Indeed, all the major housebuilders have variants of their own 'in-house' shared equity and equity loan schemes. The Share to buy mortgage team have considerable experience of arranging all types of shared ownership and shared equity mortgage, including for the FirstBuy and HomeBuy direct schemes.
The difference between Shared Equity and Shared Ownership
The differences between shared equity and shared ownership are complex, but generally, with shared equity you purchase ALL of a property and legally own ALL the property. However, the key point is that your deposit comprises a generally sizable equity sloan making up the difference between the mortgage and purchase price (i.e. to a large extent, this shared equity loan is your deposit). In contrast, shared ownership schemes are usually undertaken whereby you only own a specific share as a lease on a shared ownership property (normally owned by a housing association), and you can only achieve 100% ownership by 'staircasing' up from shares of 25%+ to full ownership. With shared equity there is generally a requirement to clear the equity loan within a typical period of 5 to 10 years. Shared equity is generally provided by housebuilders and shared ownership by housing associations, but there are some housing associations with allocations for the FirstBuy equity loan scheme.
Strengths and weaknesses of Shared Equity v Shared ownership
In Shared Equity's favour:
- Your own personal deposit contribution in a shared equity property purchase can be small (often as little as 5%, and whilst you can obtain shared ownership mortgages with a 5% deposit, these are not offered by as many lenders as in FirstBuy and HomeBuy Direct)
- Shared equity is normally on houses rather than flats, and you are therefore less likely to have to pay service charges
- Most importantly, rates tend to be better on shared equity mortgages rather than shared ownership home loans because the lenders in a shared equity case will treat the 'loan to value' as being based on your share divided by the whole market price - so you could find yourself putting down as little as 5% of your own money as deposit but obtaining a mortgage rate put aside for a 25% deposit!
Against shared equity:
- As open market shared equity schemes are currently closed to new funding, you are presently restricted to new build shared equity homes. With shared ownership, the properties are USUALLY new builds available under the new build homebuy scheme, however, it is also possible to buy shared ownership properties on a second hand basis through a resale scheme when an existing owner sells their share - so potentially, shared ownership offers more choice of properties.
- The initial share is normally much larger in shared equity (typically 70%) compared to 25% minimum with shared ownership. Thus, the mortgage is likely to be much larger on a shared equity property. Moreover, although shared equity mortgage rates can be better and the deposit lower, 5% deposit on a 75% share may well be more than a 10% or even 15% deposit on a 25% share.
- Most importantly, with shared equity, as you are buying the whole property you may have to pay stamp duty tax on the whole property (if it is over the threshold) whereas you are unlikely to have to pay any stamp duty buying a share in a shared ownership property.
Further information on Shared Equity Mortgages and shared equity properties
With Share to buy, you can search for shared equity properties for sale in your area and if we do not have any, you can register for details of when they become available. If you have found a shared equity property available ont the FirstBuy scheme we strongly suggest that you submit an agreement in principle application or use the urgent enquiry facility so that we can help you as soon as possible.
Shared Ownership Case Studies
Latest News
Shared ownership properties for sale
16th May 2012
Are you looking for properties for sale through the shared ownership scheme? These are homes where you part buy part rent, meaning that your initial deposit and potentially your monthly payments are somewhat lower than in a normal house purchase. Look no further! We have shared ownership houses and flats available on the part buy scheme across England. Search our property portal or register for alerts.
Firstbuy shared equity houses in Greater Manchester
16th March 2012
This is your chance to buy a share in a brand new 2, 3 or even 4 bedroom house and yet own the whole thing from the outset. These lovely houses in Hyde, Manchester are available on the Firstbuy scheme, a Government sponsored shared equity affordable housing scheme that means you can put down a deposit starting from as little as £5,600. More detail here on the 2 bed house, 3 bed house and 4 bed house.
Tools
- Search: search for shared ownership properties; search for shared ownership mortgages; search for shared ownership solicitors.
- Calculators: shared ownership mortgage calculator; staircasing calculator; open market calculator.
- Apply: shared ownership mortgages; agreement in principle
1. What is shared equity?
Shared equity schemes enable a customer to share equity with another party in order to make the purchase easier (e.g. to assist a first time buyer). The classic example of shared equity ownership is where a first time buyer purchases a property with a small deposit of their own, and a larger deposit on top by way of an equity loan. The main Government shared equity scheme is FirstBuy; this was the Coalition’s first high profile shared equity first time buyers policy. Of the shared equity schemes currently available UK wide, you should note that there are currently none available in the open market shared equity category, meaning buyers are generally restricted to new build homes.
2. Where can I find shared equity homes?
You can find shared equity properties for sale on our shared equity property website. We list both shared equity properties and part buy part rent homes. For each shared equity property we list, we show the minimum deposit required to that buy that home.
3. How much deposit to I need to buy a shared equity house?
The main benefit of equity share properties is that the buyer can generally put down as little as 5% as a deposit whilst accessing mortgages available for a 25% deposit on the open market. This is because shared equity lenders will generally base the ‘loan to value’ of the purchase on the home equity share divided by the full market price, NOT the deposit in relation to the share itself.
4. Where can I find information on shared equity in London?
To find shared equity homes in London, or other areas like Manchester, search our affordable homes property website. Alternatively, contact your regional homebuy agent.
5. Is there a shared equity calculator to show what I can borrow?
The HCA provides strict affordability rules for what you can borrow with an equity share scheme. When you find a property you wish to buy through a shared equity scheme, the provider of that home will take you through an affordability assessment.
6. Where can I find information on shared equity mortgages?
Share to Buy ltd can has extensive experience in arranging equity share mortgages and we have access to all the main shared equity mortgage providers. This includes shared equity mortgage lenders who will take a deposit of just 5%. Contact us to discuss your equity share mortgage enquiry and to find out about the latest shared equity mortgage rates In the UK. Finally, we are able to arrange shared equity mortgages countrywide, although schemes vary within the devolved nations.
Compare mortgages
Compare shared ownership mortgages for the part buy part rent scheme.
