Part-Owned
Property
A
local housing association may potentially offer to a borrower
a part-owned property on a shared ownership basis. This
is where the borrower will raise a mortgage on a percentage
of the mortgage and pay the remainder as rent to the housing
association.
Generally
these schemes are aimed at a first time buyers. Some lenders
may potentially except shares lower than 50% and with
an impaired credit history. The borrower generally will
take out a mortgage which is 100% of the share.
The
lender will calculate the mortgage, other loans and the
rental charges for income affordability. It is not possible
to get extra on top of the 100% of the share for consolidation
or furnishing.
The
share generally 50% will then will able to be increased
by increment amounts say 25% steps at a time called staircasing,
until if desired the borrower will own the property out
right. This a great way to get people on lower incomes
on the housing ladder. For example key workers whom cannot
afford the high prices in the London area.
If
the property is sold the borrower may potentially receive
a percentage of the increase in equity according to their
share of the property. Also if the property has now increased
in value the borrower can if the local housing association
permits to remortgage and free up the equity in their
share.
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