Seven steps to buying a home with shared ownership
As part of Shared Ownership Week 2019, Eloise Robins, head of shared ownership sales at property agent JLL, gives a guide to the buying process
1. Find your home
First of all, check you are eligible for the shared ownership scheme by speaking to an independent financial advisor. After that, you can start to look for shared ownership properties in your area by searching on online portals such as Share To Buy, Rightmove and the JLL Residential website. Most housing associations and selling agents will register your details in order to suggest properties and arrange viewings.
2. Financial interview
Once you have decided on a property that is right for you, you’ll be required to have a full financial assessment with the housing provider. This is one of the differences between shared ownership and purchasing a home outright. It is intended to ensure you can afford to buy the property, including making mortgage repayments and paying the rent on the share you don’t own.
This assessment will also enable an independent financial advisor to confirm the percentage share you can purchase, as well as the exact amount of rent repayable on the unowned share.
Top tip: To reduce your monthly rent payments, it’s best to buy the biggest proportion of the property that you can afford.
3. Make your offer
Once you have passed the financial interview, you can make a reservation on your home. This usually involves a fee of between £250 and £500, but this can vary depending on the housing provider. If the offer is accepted, this reservation fee will be taken off the asking price (which is payable upon completion) or be credited to the rental account upon completion.
Top tip: Ask the salesperson for clarification on when and how you will recoup your reservation fee.
4. Arrange a mortgage
Now you know what share you are buying and how much rent you will need to pay, you can consider your mortgage options. There are now more than 20 mortgage products on offer for shared ownership purchasers, so be sure to shop around. A mortgage advisor can help you do this, or you can go directly to a bank.
Top tip: Make it clear that you’re purchasing with the shared ownership scheme, as there may be different financial criteria.
5. Legal and valuation
You will need to appoint a solicitor, who along with your sales agent will guide you through the legal and valuation process. It is a good idea to find someone who has experience dealing with shared ownership transactions. They will be able to explain the service charge and any restrictions on staircasing – the process of buying a bigger share – which are outlined in the property’s lease.
Top tip: The mortgage valuation is generally arranged directly with the sales agent, who gives valuers access to the property.
6. Exchanging contracts
Exchanging contracts means you are legally bound to buy the property, and the housing provider is legally bound to sell it to you. At this point you will have to pay between five per cent and ten per cent of the share value to secure the purchase. You will also find out your completion date once you have exchanged contracts.
Top tip: This step usually occurs 28 days after the point of reservation.
7. Completion
Upon completion, your mortgage funds will be drawn and you’ll have transferred all monies to the housing provider’s solicitor. You’ll also need to set up a direct debit for both the monthly rental repayments on the share you don’t own, and any service charges.
Congratulations! You have the keys and can now move into your new home.