Understanding The Difference Between Shared-Ownership And Shared-Equity Scheme
Both the Shared-Ownership and Shared-Equity schemes have been introduced as further means of assisting those who are unable to afford a full mortgage or 100% of their property, to still find their way on to the elusive property ladder.
The two schemes are often confused with one another so below we have listed a few key facts to hopefully assist you in determining which scheme is suitable for your needs.
- Always Leasehold
- Party-buy/part rent home ownership scheme – you will own a percentage of the property
- Based on household income and lifestyle
- Part funded by way of mortgage/savings – from this you will own a % of the property (between 25% – 75%)
- Remaining % will be owned by a Housing Association
- You will pay monthly rental instalments to the Housing Association in respect of their share of the property
- Once you are able to afford to, you can purchase further percentage of the property from the Housing Association – this is called ‘Staircasing’
- Also available for over 55 year olds and those with long-term disabilities
- Freehold or Leasehold
- Government-backed scheme
- You will legally own the entire property
- Only available on new-build properties up to £600,000
- Equity loan will be provided by the Help To Buy Government Scheme up to 20% of the value of the home you are buying
- Only a smaller deposit is then required by you (usually 5%)
- The remaining 75% is funded by way of standard mortgage
- Interest-free for the first 5 years
This article was produced on the 10th March 2017 by our Property team for information purposes only and should not be construed or relied upon as specific legal advice.