Different Types Of Shared Ownership Schemes
Many people who want a home cannot afford the complete down payment. Because of this, a scheme has been designed to help people get into a home they would like without needing the complete down payment of the property. This is called a shared ownership scheme. What this means is that instead of purchasing the entire property, only a portion of the property is purchased. This allows you to get into the home and work toward buying the entire property. Many first time buyers choose this option. There are both private sales available through housing association agents and government run programs available.
Government program
The government program is called 'Homebuy' and is available in four different types of scheme including newbuild, direct, rent to buy and social. Determining the one that will best suit your needs will depend on your situation. The legalities of the scheme should be handled by your solicitor, so you understand all the terms of the scheme and what your responsibilities are.
Private programs
Private shared ownership schemes are managed by agents of the housing association. If you are interested in pursuing such a scheme you should make sure to contact an agent to register for available opportunities in your area. The details pertaining to the particular programs will vary so make sure you have a clear understanding of how they work and what you are getting into prior to committing to it.
Property ownership
When you share in ownership you typically do not purchase the entirety of the property. In fact, you usually only purchase a particular stake in the property that can be from twenty five to fifty percent. You get a mortgage for the portion of the property you own and then you rent the other part that is not owned by you. The advantage of this is that you can live in a home and own a portion of it affordably. However, if property values increase you may not benefit as much as you potentially could because you do not own the entirety of the property.
Staircasing
Staircasing is a term that means gradually increasing the amount of ownership in the property. Various programs may allow you to increase the percentage of ownership you have in the property. You may even be able to work up to a complete 100% though not always. Your solicitor will be able to advise you as to how much percentage you can work toward and how quickly you can do so.
Whether you choose a private or government program it is advisable to get independent advice on your mortgage. This way you will be sure your needs are met and that you understand all of your rights and responsibilities over the term of your mortgage. There are many great aspects to the program and it is a way to get many first time buyers into the market. But there are also some disadvantages that you should be aware of before committing to any scheme.
About the Author:
Looking for a new home? Find affordable housing in the UK with SmartShare, the shared ownership and rent to buy specialists.
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