Shared Equity: Costs and affordability

Can I afford a home through the Shared Equity scheme?

What are the costs of buying a Shared Equity property?

Shared Equity provides a way to buy a home with a smaller deposit and a reduced mortgage, thanks to the support of an equity loan that covers part of the property’s value. This makes homeownership more achievable for buyers who may not be able to afford the full cost upfront.

When considering a Shared Equity home, it’s important to understand both the initial costs of buying and the ongoing costs you’ll need to budget for once you’ve moved in. You’ll also need to keep in mind how much it will cost to repay the equity loan in the future, as the amount owed will change depending on your property’s value.

What payments will I need to make with Shared Equity?

Here are some of the key costs associated with buying through Shared Equity:

Upfront costs

• Deposit: Usually 5% to 10% of the property’s value, but this can be higher.
• Mortgage broker fees: Most mortgage brokers will charge a fee for their services which can vary from a fixed amount to a percentage of the purchase price, although many do offer a free initial affordability assessment in the early stages of your property search. A mortgage broker should clearly explain what fees are charged and when before they undertake any work on your behalf.
• Solicitor fees: You’ll need to hire a solicitor or licensed conveyancer to handle the required legal work associated with buying a home. It’s essential to have a solicitor in place before submitting your mortgage application and to confirm that they are approved to work with your chosen mortgage lender. Solicitor’s fees will usually be based on a fixed cost basis.
• Stamp Duty: If you’re a first time buyer in England, you don’t pay any Stamp Duty on homes priced up to £300,000. For properties costing between £300,001 and £500,000, you’ll pay 5% on the portion above £300,000. However, if the property price is over £500,000, you won’t qualify for first time buyer relief at all and the standard Stamp Duty rates will apply instead. Stamp Duty is also different for non-first time buyers and you can find more information about this here.

Ongoing costs

• Mortgage repayments: Made on the portion you’ve borrowed from your lender.
• Equity loan repayments: Often interest-free for the first few years, then interest charges may apply.
• Additional costs: Service charges if buying a leasehold property.

When selling

If you choose to sell your home, you must repay the equity loan plus a percentage of any increase in the property’s value. If property prices rise significantly, this can mean paying back more than you originally borrowed.

Where should I start my Shared Equity property search?

Do you feel that you have the key information you need about the Shared Equity housing scheme, including what it is and the eligibility criteria? If so, now is the perfect time to start your search for a new home using our property search tool and discover your path to homeownership.