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What is a Shared Ownership Mortgage in Bristol?

The Shared Ownership Scheme is a government initiative in the UK designed to help individuals enter the property market, including those in Bristol. It is open to permanent UK residents who are either first time buyers or previous homeowners facing difficulties in purchasing a new home.

To qualify, your household income must be below £80,000, and the property you are buying in Bristol will typically be a leasehold property. This means you will own the home for a specified period of time.

Through the Shared Ownership Scheme, you can buy a portion of the property (usually between 25-75%) using a mortgage, while the remaining portion is rented. The rent, which may include service charges and ground rent, is typically lower than the market value and paid to a housing association.

Updates to Shared Ownership Mortgages in Bristol

Important updates were made to the Shared Ownership Scheme in April 2021 as part of the government’s Affordable Homes Programme. These changes brought some key modifications to how the scheme operates.

Previously, the minimum share you could purchase in a property was 25%. Under the updated rules, in some cases, it can now be as low as 10%.

Additionally, when buying additional shares in the property, you are no longer limited to minimum increments of 5-10%. Instead, you have the flexibility to purchase shares in 1% instalments.

Furthermore, the fees associated with buying these additional shares have been reduced. Additionally, for the first 10 years of ownership, the responsibility for maintenance and repair costs now falls on the landlord rather than the homeowner.

If you obtained a Shared Ownership Mortgage in Bristol before these changes were implemented, it is possible that these new rules may apply to you moving forward. It is always advisable to confirm the specifics with your mortgage provider, as individual cases may vary.

How do I apply for a Shared Ownership mortgage in Bristol?

Before proceeding with the mortgage process, it is crucial to determine if you meet the eligibility criteria for Shared Ownership in Bristol. To do this, you should contact your local Help to Buy agent in the area where you intend to purchase.

During your conversation with the Help to Buy agent, they will likely require specific information from you. This may include details about your income, budget, preferred location, and credit history. Once your eligibility is confirmed, you can proceed with applying for your mortgage.

To navigate this process effectively, it is advisable to consult with a mortgage broker in Bristol. Not all mortgage lenders offer products for individuals utilising Shared Ownership in Bristol.

The amount you can borrow will typically be based on factors such as your income and associated fees, including rent payments.

Pros & Cons of Shared Ownership Mortgages in Bristol

Like any mortgage option, Shared Ownership Mortgages in Bristol have their advantages and disadvantages. It’s important to consider these factors before making a decision.

Firstly, not all mortgage lenders offer mortgages specifically for Shared Ownership in Bristol. That said, there are still many lenders, including some on our panel, who do offer these types of mortgages. This provides options for potential borrowers.

One of the benefits of a Shared Ownership Mortgage in Bristol is the potential for long-term stability. Through this scheme, you can become both an owner and occupier of a property, offering a sense of security.

Saving for a deposit can be challenging, but Shared Ownership Mortgages in Bristol typically require lower deposits compared to open market purchases. This makes homeownership more accessible, especially for individuals with lower wages.

It’s important to note that regardless of the share you own, you will be responsible for paying 100% of the ground rent and service charges associated with the property. Over time, you can participate in “staircasing” to increase your share ownership until you fully own the property.

At that point, you no longer pay rent, but your mortgage, ground rent, and service charges still apply. Keep in mind that once your owned share exceeds 80%, you may need to pay Stamp Duty on the entire property value, although exemptions may apply for first time buyers in Bristol.

Despite the potential costs, monthly mortgage payments for Shared Ownership Mortgages in Bristol can be more affordable than traditional mortgages or private renting.

It’s important to consider that as a part-owner, you will need permission from the housing provider before making any structural changes to the property. This requirement limits some of the freedom you would have if you owned the property outright.

Can I sell my home if I have a Shared Ownership Mortgage in Bristol?

When you own a home through a Shared Ownership Mortgage in Bristol, there are specific considerations if you decide to sell and move elsewhere.

The ability to sell your home with a Shared Ownership Mortgage in Bristol depends on the percentage of the property you own in shares. Typically, you need to own 100% of the property before you can proceed with selling it.

It’s important to be aware that the housing association you partnered with will usually have “first refusal” rights for the first 21 years after your purchase. This means they have the legal right to make an offer to buy the property themselves before you can put it on the open market.

If you do not currently own 100% of the property, you will need to explore the option of purchasing the remaining shares in order to become the sole owner before proceeding with the sale.

Is a Shared Ownership Mortgage in Bristol right for me?

A Shared Ownership Mortgage in Bristol is a great option for first time buyers in Bristol who have limited savings for a deposit but still want to step onto the property ladder. This mortgage scheme can help make your homeownership dreams a reality.

It’s important to understand that navigating the process of a Shared Ownership Mortgage in Bristol can be complex, and there are various fees and contractual details to consider. It’s crucial to be fully prepared and informed before proceeding.

Ultimately, the decision to pursue a Shared Ownership Mortgage is a personal one. To ensure you are well-prepared and have all the necessary information, it’s advisable to schedule a free mortgage appointment with a trusted mortgage broker in Bristol.

They can provide guidance and assist you in preparing for this opportunity. For further information about the Shared Ownership Mortgage Scheme, you can visit the government’s OwnYourHome website, which offers more details and resources.

Date Last Edited: December 6, 2023

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