Censeo Financial: A Finance Expert’s Guide to Shared Ownership
Specialist advice on Shared Ownership mortgages
If your biggest hurdle to home-buying is saving up a deposit, Shared Ownership could lend a helping hand. Giving you the option to buy a home with a smaller deposit, the scheme offers a quick, affordable route on to the housing ladder. But if you’re new to the world of Shared Ownership, you’ll probably have a lot of questions about how the scheme can help you – and no, it doesn’t involve sharing your home with a stranger!
Are you in the dark about how to buy a Shared Ownership property? We’ve enlisted the help of Rupi Hunjan, Managing Director at Censeo Financial, to answer some of your questions:
Is Shared Ownership a good idea?
Affordability for housing, especially in the first time buyer market, has been a massive concern for as long as Rupi can remember. This is usually due to demand out stripping supply which pushes prices up. However, there may be a glimmer of hope for first time buyers – it’s Shared Ownership! A secured tenancy with a financial interest in the property.
Shared Ownership is a great option for people who want to own a portion of their home without paying beyond their means. Combining the lower cost of renting with the advantages of homeownership, you’ll be able to buy a smaller share of your home (resulting in a smaller deposit), while paying subsidised rent on the share that you don’t own.
While this might just sound like renting with a twist, for Rupi the scheme offers far more. Helping to “extinguish the stigma people have with renting”, Shared Ownership can give budding buyers hope that purchasing their first home is possible. Rather than presenting budding homeowners with a new way to buy, Shared Ownership instead offers “a new way to rent”.
Is Shared Ownership better than renting?
It has got to a point where renting is often perceived to have a socio-economic stigma attached to it and is seen as a default position to ownership. This has resulted in different types of innovative schemes which have led to a myriad of affordable tenures of which Shared Ownership is seen as the winner.
If you want to be able to own some of a home in the near future, Shared Ownership is definitely a more attractive option than renting. But what’s the key difference? While renting involves putting money in your landlord’s pocket, Shared Ownership enables you to build equity in your home over time.
As Rupi puts it; “having part of an asset like a residential property is better than having nothing at all”. And by owning a portion of your property, you’ll be able to decorate and style your home as you please and won’t be at the mercy of difficult landlords or flat mates. If your financial situation changes or improves over time, you’ll also have the option to buy more shares of your home through ‘staircasing’. The more shares you own in your property, the less you’ll pay in rent!
Is Shared Ownership worth it in the UK?
As house prices soar in the UK, affordable homeownership schemes like Shared Ownership are more appealing than ever. If you are put off by the price of a home in the UK – and who could blame you? – Shared Ownership could be the life raft you need.
As mentioned earlier, having part of an asset like a residential property is better than having nothing at all. It all comes down to what can you afford to pay every month, hence a home is a home regardless of how it is paid for.
Today, affordability is governed by your monthly outlay over and above the cost of the item – this is in many respects like buying a car or a phone. Nobody asks how much it’s worth, but what it costs per month.
Unless supply goes up, demand comes down, lenders decide to lend more than they should or prices drastically reduce, we have a situation where buying a house is going to remain unaffordable for many people, especially first time buyers.
For Rupi, the scheme offers a jack of all trades approach for aspiring homeowners, with “affordability, financial inclusion and security of tenure” all covered by the umbrella of Shared Ownership. What’s not to like about a scheme that helps cash-strapped buyers purchase homes that they can love? Click here for more information of Shared Ownership costs.
Do I need a mortgage for Shared Ownership?
Shared Ownership might be billed as a more affordable route to the housing ladder, but you’ll still need to apply for a Shared Ownership mortgage. There’s a lot of lenders offering Shared Ownership mortgages, although many of these are not on the high street so it’s often easier, quicker, and cheaper to use a specialist Shared Ownership mortgage broker like Censeo.
How does a mortgage work with Shared Ownership?
With a Shared Ownership mortgage, you’ll only need to get a mortgage on the share of the home you are buying, and a deposit that is between 5-10% of the share price. If you are looking to buy a 25% share of a property worth £200,000, your share price will be £50,000. This means that if you put down a 10% deposit (£5,000), you’ll need a mortgage of around £45,000 to cover the rest of the share!
Will Shared Ownership end?
While Help to Buy closed to new applicants in October last year, and officially comes to an end on March 31st 2023, there’s no end in sight for Shared Ownership. Instead, the scheme has adapted over time to make it even easier for first time buyers to purchase their first home.
For anyone looking to get their feet on the housing ladder, Rupi asserts that “Shared Ownership is here to stay and may just be the best tool for a more inclusive society”. With lenders seeing the demise of Help to Buy, and the Buy to Let market easing, lenders need to lend and therefore many are turning to the Shared Ownership market – it’s now commonly referred to as the fourth tenure!
Q&A conducted with Rupi Hunjan MD, Censeo Financial
Introducing Censeo Financial
Censeo Financial are an award-winning mortgage broker specialising in Shared Ownership and affordable homeownership. Having been trading for over 16 years, we work with many housing associations, councils and developers and have helped thousands of first time buyers get onto the property ladder.
We have access to all lenders who offer Shared Ownership mortgages and often get exclusive deals that you wouldn’t get from going to a lender direct. We understand the importance of providing a friendly and helpful service and have achieved 98% five star Google reviews in the last 12 months – we strive to offer the best service possible and to find our customers the best mortgage for their personal needs saving time and money.
Share to Buy is a one stop shop for affordable homes – on our website, you can search for properties, compare mortgages and find out all you need to know about alternative home-buying schemes.