Shared Ownership Jargon Busting
Shared Ownership is a popular and more affordable way to get onto the property ladder. Created to support buyers with lower salaries and a smaller deposit, it allows them to purchase a share of a property, typically between 25-75%, and pay rent on the remaining share. If you're new to Shared Ownership, it's important to understand some of the key terms used in the process. In this blog, we'll be jargon-busting some of the most common Shared Ownership terminology.
Starting with the most obvious, Shared Ownership is a government scheme that allows buyers to purchase a share of a property, typically between 25-75%. The buyer pays a mortgage on their share and rent on the remaining share. This scheme is designed to make the process of buying a home more affordable for those who may not be able to afford a full mortgage.
Staircasing is the process of purchasing additional shares in your Shared Ownership property. Once you own a share of your property, you can choose to purchase additional shares at a later date. This allows you to increase the percentage of the property that you own and decrease the amount of rent you pay.
A mortgage is a loan that is used to purchase a property. In the case of Shared Ownership, the mortgage is used to purchase the share of the property that the buyer owns. The amount of the mortgage will depend on the value of the share that the buyer is purchasing.
A service charge is a fee that is charged to cover the cost of maintaining and managing the communal areas of a property. This can include things like cleaning, maintenance, and repairs.
A credit rating is a measure of an individual's creditworthiness. It takes into account things like payment history, outstanding debts, and credit utilization. When applying for a mortgage, lenders will look at your credit rating to determine your eligibility for a loan.
Shared Ownership can be an affordable and accessible way to get onto the property ladder, but it's important to do your research and understand the key terms involved. With the knowledge gained from this jargon-busting guide, you'll be well on your way to understanding the ins and outs of Shared Ownership, and deciding if it could be the perfect option for you.