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How to get a shared ownership mortgage

How to get a shared ownership mortgage

Jenni Hill
Last Updated 5 December 2023

If you can’t afford to save a big deposit or you’re struggling to get a mortgage, a shared ownership mortgage could be right for you.

Shared ownership lets you get on the property ladder by buying a percentage of a home and paying rent on the rest. You’ll put down a much smaller mortgage deposit and take out a shared ownership mortgage for the share that you’ll own. You’ll pay rent to a housing association or private developer on the remaining share.

This can be a popular option for those who want to buy a home in London, where homeownership can be out of reach no matter how hard you try and save. But you don’t need to live in the capital to make the most of shared ownership.

In this guide

What’s the difference between a standard mortgage and a shared ownership mortgage?

Let’s compare traditional residential mortgages to shared ownership mortgages:

Traditional mortgages

With a traditional mortgage, sometimes called a standard mortgage, when someone buys a house with a mortgage, they usually need to put down a deposit of 5-10% of the property’s value. 

For example, if you wanted to buy a £300,000 house with a 10% deposit, you’d need to save £30,000 and take out a £270,000 mortgage.

Shared ownership mortgage

When you buy a shared ownership property, you don’t need to save a huge deposit or take out a really big mortgage. Instead of saving 5-10% of the property’s price, you only need a deposit equal to 5-10% of the share that you’re buying. 

So, if you were to buy a 25% share of a £300,000 property, your 10% deposit would be just £7,500.

As for the mortgage, you’d only need to borrow £67,500. The remaining £225,000 of the property would belong to the housing association or private developer. It’s this portion that you’d pay rent on.

If you’d like to eventually own the property in full, you can buy more shares over time. This is known as ‘staircasing’. You can buy shares in 10% increments, but these cost more if your home’s value has gone up and less if it has gone down.

Shared Ownership Mortgage

With a shared ownership mortgage, you only need to save 5-10% of the share of the property that you’re buying, instead of the 5-10% of the whole property price.

You can buy more shares in the property over time, purchasing them in 10% increments. However, these may cost more if your home’s value has gone up over time.

Standard Mortgage

With a standard residential mortgage, you normally need to put down a house deposit of 5-10% of the property’s full value. 

Am I eligible for shared ownership?

Many people assume you can only buy a shared ownership property if you’re a first-time buyer, but this isn’t true.

You can use the shared ownership scheme if your household income is £80,000 a year or less  (£90,000 or less if you live in London) and you can’t afford to buy a home the traditional way. 

One of the following must also be true:

  • You’re a first-time buyer
  • You used to own a home but can’t afford one now
  • You already own a shared ownership home but you’d like to move
  • You own a home and want to move but you can’t afford one that meets your needs

If you’re applying through a housing association, you may need to show that you live in or work in the area you’d like to buy.


Top Tip

You must be a first-time buyer to qualify for a shared ownership mortgage

Can I get a shared ownership mortgage with bad credit?

If you’ve had problems with debt in the past, it can be harder to get a shared ownership mortgage than if your credit history was squeaky clean. But it’s certainly not impossible.

It’s a good idea to check your credit report with each of the three credit referencing agencies (Experian, Equifax and TransUnion) before applying for a mortgage. These companies will usually suggest how you can improve your credit rating, so you may be able to boost your score in the lead up to your mortgage application. If you can improve your credit score, and possibly get it up to good or excellent you can improve your chances of getting a shared ownership mortgage.

Even better — speak to a shared ownership mortgage advisor. They’ll have experience helping people with bad credit to buy a shared ownership property and will help you get the mortgage you need.


Why is an excellent credit score better?

Customer who have an 'excellent' credit score are 25% more likely to get a lower mortgage rate than those who have a 'good' credit score, according to Experian.

How to get a shared ownership mortgage

1. Talk to a mortgage broker

It’s a good idea to use a mortgage broker with shared ownership experience. They’ll use their extensive knowledge of the mortgage market to find the right deal for you. 

They’ll also be familiar with individual lenders’ eligibility criteria, meaning they can steer you towards those most likely to give you a shared ownership mortgage. 

You’ll need to pass a series of affordability checks, as you would with any other type of mortgage. You’ll need to show that you can comfortably afford your mortgage payments and rent payments alongside your other responsibilities. 

A good credit history can be extremely helpful too. If you’ve struggled with debt in the past, this can make it harder to access the best mortgage deals ⁠— though not impossible.

Another benefit of using a shared ownership mortgage broker is that they may identify solutions you’d never even thought of. For example, shared ownership isn’t the only affordable way to get on the property ladder. There are plenty of other alternative ways to buy a home and your mortgage advisor will know if there are more suitable options for you. 

2. Get a Mortgage in Principle

Once you’ve found a shared ownership mortgage broker, it’s time to get a Mortgage in Principle. We can help with this, by the way. 

Also known as an ‘Agreement in Principle’ or ‘Decision in Principle’, this is a document which outlines how much you’re able to borrow from a particular lender based on the information you’ve given them. 

Getting a Mortgage in Principle can be helpful for many reasons. When looking for a property to buy, you’ll have a good idea what budget you’re working with. The last thing you need is to spend time looking at properties you can’t afford. 

Estate agents and sellers tend to favour potential buyers with a Mortgage in Principle over those who don’t have such an agreement yet. It’s unlikely that your offer will be accepted if you don’t have one in place already.

However, a Mortgage in Principle isn’t legally binding. Lenders do sometimes change their minds and reject applicants who previously met their criteria. To learn more, take a look at our guide on what to do if your mortgage application is declined. 

3. Apply for a mortgage

Once you’ve got your Mortgage in Principle and have found the property you like to buy, it’s time for the formal mortgage application process. 

Don’t worry if you don’t have the first idea what you’re doing. If you’re using a mortgage broker, they’ll lead the way and complete the application on your behalf. 

You’ll need to give them all the information they need, but they’ll gather all your documents together and submit them to the lender for you. 

Once your application has been submitted, you’ll then hear back from the lender on whether your application has been accepted or declined. It’s unlikely that you’ll be rejected for a mortgage when using an experienced shared ownership broker, because they’ll help you avoid the lenders with criteria you’d struggle to meet.

Once your mortgage is officially approved, it’s just a matter of time before you can move into your new place. Don’t forget you’ll need to add a solicitor and surveyor to your home buying dream team. They’ll make sure the property is worth its price tag and guide you through the legal process. 

Once all the financial and legal bits are taken care of, you’ll be given a completion date. This is the date when you’ll pick up your keys and the property will be officially yours.

Kickstart your journey to homeownership

Create a plan with Tembo today to find out how much you could borrow. We'll give you a personalised recommendation, and you'll get a downloadable Mortgage In Principle at the end. It takes minutes to complete, and there's no credit check involved.

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What is the best mortgage broker for shared ownership?

There are many shared ownership brokers to choose from, so it’s a good idea to do a little research before picking one. 

If you’d like a shared ownership mortgage broker you can meet face to face, a local broker may be a good fit. Some local brokers will let you visit their office and talk through your needs in person. This can be a nice way of building a relationship with the person who’s helping you buy a home.

Working with an online mortgage broker may be more convenient, particularly if you work long hours, live a busy lifestyle or hate meetings. Many online brokers (like us) communicate by email, web chat or phone, making it easier to talk to them during your commute or when you’re supposed to be working, but aren’t. 

And since online mortgage brokers are able to serve customers from across the UK, they may have more shared ownership experience than local brokers who are restricted to their own town or city.

Why you should choose Tembo as your mortgage broker

Is shared ownership right for me?

Buying a property through a shared ownership scheme can work out more expensive in the long run than buying a house with a deposit and a mortgage, but it can be much more affordable in the short term. 

Instead of seeing it as an alternative to buying, you might see it as an alternative to renting. At least with shared ownership you’ll be edging closer towards full homeownership with each payment you make. 

At Tembo, we specialise in helping buyers discover their true buying budget

We work with over 100 lenders to help find you the perfect mortgage product or specialist lending scheme to boost your mortgage affordability and get on the property ladder sooner. Get started today by creating a plan.

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