Normally with a shared equity scheme the buyer only has to put down a small deposit, usually 5%. The government then tops this up to potentially 25% of the purchase price, with a low or no cost equity loan, with the balance paid by a mortgage. Having a larger deposit should enable you to obtain a better rate which you otherwise wouldn’t be able to qualify for.
At the end of the mortgage term, you will be required to pay off the equity loan in full. The loan will be proportionate to the value of the property at the end of the term which means you could be paying back significantly more than you borrowed.
An example of this being that you purchase 40% of the property value and take a mortgage for this portion minus a small deposit – typically 5% or 10% of your share. For the remaining 60% of the value, you pay rent to the local housing association. The rent on a shared ownership home is usually set at around 3% per annum of the unsold equity. So for example, if the property is worth £100,000 and the landlord’s share is 60%, that would equate to: 3% of £60,000 = £1,800 per annum or £150 per month.
ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. COMMERCIAL MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY OR THE PRUDENTIAL REGULATION AUTHORITY.
FFP SolutionsOld Bank Chambers, High Street,St Asaph, LL17 0RD
Registered in England and Wales Company No. 08958626, Registered Address: Unit 32 Llys Edmund Prys, St. Asaph, Denbighshire, LL17 0JAFFP Solutions Ltd is a credit broker and not a lender and is entered on the FCA register under reference 624257You can find FFP Solutions on the Data protection public register under reference: ZA056605
YOUR HOME OR YOUR COMMERCIAL PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
THE GUIDANCE PROVIDED WITHIN THIS WEBSITE IS SUBJECT TO THE UK REGULATORY REGIME AND IS THEREFORE PRIMARILY TARGETED AT CONSUMERS IN THE UK
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