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5 Common Myths About Shared Ownership and Staircasing

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10/08/2023

As shared ownership becomes a more popular method of affordable home ownership, particularly in the current climate, we inevitably see more questions being raised about the scheme.

While shared ownership is a great option for many potential homebuyers, they may be dissuaded by some of the misconceptions around the scheme that circulate.

Today we’re exploring the 5 common myths about shared ownership, staircasing and why it’s still a great choice for many potential homebuyers.

Myth #1: “I’ll never actually own my own home”

This is a common misconception that circulates within the market and is often a result of people not understanding the entirety of the process. While the shared ownership process often starts with a buyer owning a percentage of their home, the process of staircasing allows a buyer to purchase a larger share of the property.

By taking advantage of staircasing, homebuyers can staircase up to own 100% of their property, buying more shares in chunks. The best part is, this staircasing process is flexible - meaning you can buy more shares as and when you feel comfortable.

Myth #2: “It’s really difficult to get a shared ownership mortgage”

Although not all lenders are able to provide mortgages for Shared Ownership, the majority do - especially as the scheme grows in popularity. Fortunately, shared ownership mortgage lending is also based on a similar affordability check to that of a traditional mortgage. This means you’re evaluated based on your income, outgoings, credit rating and deposit.

Increasingly, getting a shared ownership mortgage is not much more difficult than buying a property through traditional means. If you want to know what your mortgage might look like, you can find our shared ownership mortgage calculator here.

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Myth #3: “I can’t decorate my home or make the space my own”

This is not true. As the homeowner, you’re free to decorate your home and make the space your own so that you feel comfortable. While larger projects may require permission, it’s always something you can talk through with us.

Shared ownership is designed to provide you with the opportunity to get on the property ladder, which means all of the benefits that come with that - such as redecorating.

Myth #4: “I’ll end up paying more in shared ownership than renting”

A common misconception is that because you’re paying both mortgage payments and rent, it’s cheaper to privately rent and save up for buying outright.

In many cases, this is incorrect. When you buy with Shared Ownership, you only pay a mortgage on the percentage share of the property you own and then a below-market-value rent on the remainder. This generally means that your monthly outgoings are much lower than if you were to privately rent.

It’s important to also remember that as you increase the share you own in the property, your mortgage payments may go up but your rent will decrease. When you consider the rate at which rental prices are increasing, this is often a cheaper overall outlay, particularly if you’re buying near larger cities where rental prices are higher.

Myth #5: “I won’t be able to get a deposit for shared ownership if I can’t for buying a house outright”

While at first, this seems logical, the situation is very different once you start to consider the numbers. If you’re buying a home outright, you generally need a deposit based on the entire purchase price of the property. If you’re buying a shared ownership property, you only need a deposit based on the share you’re purchasing.

For example, if you’re buying a 25% share of a home worth £300,000 - which is £75,000 - a 5% deposit on this share would only be £3,750. This is much more accessible for many people than raising a deposit against the full market value of a property.

Remember, if you're looking to take advantage of shared ownership, we're able to help. You can get in touch with us here Platform via our contact page.