Shared Ownership Right to Buy
What is the Shared Ownership Right to Buy Scheme?
The Shared Ownership Right to Buy Scheme, was recently announced by the Government to assist Council and Housing Association Tenants purchase part of their home.
This is great for those individuals who are currently unable to take advantage of the standard Right to Buy Scheme. Which you will either be able to afford or will not.
For example due to their incomes not being high enough to get a Mortgage for the full amount they require. Or due to them not having the funds to take up the offer.
Who is eligible for Shared Ownership Right to Buy?
Any new or existing Council or Housing Association tenants.
Unlike the original Right to Buy Scheme, where you have to have been a tenant for at least 3 years.
This is available immediately.
The longer you have lived in your home the greater the share of your Council Property you will be eligible to buy.
How will Shared Ownership Right to Buy work?
You will be able to purchase as little as 10% of your Homes value. Then should be able to increase your ownership share in 1% increments.
You would then pay Rent on the remaining 90% or whatever percentage share you didn’t own.
So if your property is worth £150,000 and you only want to buy the minimum amount. You will only need a Mortgage and/or Savings of up to £15,000.
Mortgage Lenders haven’t confirmed how the scheme will work at the moment. But unlike the Right to Buy Scheme, there isn’t a discount. Which could raise the need for a personal deposit.
If a Deposit is required it will be based on the share of the property you purchase, not the value of your home. Therefore, significantly less than you would require ordinarily.
A 5-10% deposit on the above example would equate to a £750 and £1,500 deposit respectively.
When will the Shared Ownership Right to Buy Scheme be introduced?
The Scheme is due to be introduced in 2021.
So if you will be able to take advantage of the new scheme. This gives you a bit of time to plan and Save, if you are able to.
However, the current Right to Buy Scheme is a better option if you are eligible. So if you can, look to take advantage of that as oppose to waiting for the Shared Ownership version of the Scheme.
What are the advantages of Shared Ownership Right to Buy?
1. Enable you to get onto the property ladder when you otherwise may not have been able to.
2. A chance to own part of you home.
3. You will have the opportunity to increase the share of the property you own.
4. Generally, property ownership is a good investment. As property tends to go up in value over mid-long term.
5. An asset that you can leave to loved ones, which may give them a foot onto the property ladder.
How much can I borrow?
Each case will be assessed on its own merits.
However, you should expect the amount you can borrow to be calculated on your deposit or discount level, potential earnings and your outgoings including any dependents.
The greater your personal deposit or discount, the less risk to the Lender. Which means in many cases, the greater your deposit is, the more you will be able to borrow.
Shared Ownership Right to Buy Mortgages with Benefit Income only
This is a possibility and may be acceptable with a small handful of Mortgage Lenders.
If you also have an applicant or an income with earned income as well, no matter how small. This will also open you up to a few further Mortgage Lenders and provide you with a few more options.
Both of the above scenarios should have options with High Street Mortgage Lenders as well as Specialist Mortgage Lenders.
Shared Ownership Right to Buy Mortgages with Bad Credit
There are a few options available currently on Shared Ownership and Right to Buy individually.
Whether you are able to obtain a Mortgage on this scheme though will be dependent on the severity and age of Bad Credit.
Simply have a question or need to get moving. Next steps?
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