Pete Mugleston | Mortgage AdvisorPete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 27th August 2019 *
We often hear from customers who are looking for a Shared Ownership mortgage with limited or no deposit to their name. Many of them are keen to hear whether it’s possible to buy a home through the scheme with just 5% deposit, while others want to know if there are lenders who offer Shared Ownership mortgages with a 100% loan to value (LTV) ratio.
To answer these questions and more, we’ve put together this comprehensive guide to 100% Shared Ownership mortgages, and you’ll find the following topics covered below...
The fantastic news is yes! There are now a minority of lenders that will offer up to and including 100% LTV (loan to value) Shared Ownership mortgages.
Although 100% Shared Ownership mortgages are available, they are a very specialised product.
The lenders are not generally ones you would usually see on the high street, so using an expert broker who specialises in Shared Ownership mortgages and has experience in this field would be crucial in obtaining one of these mortgages.
The other good thing to note is that it is also possible to get a 100% Shared Ownership mortgage with a history of bad credit but the interest rate payable may be higher than if you had a clean credit profile.
Before you get your heart set on a Shared Ownership property make sure the housing association will allow a 100% mortgage, as not all do.
What are the eligibility requirements for a 100% Shared Ownership mortgage?
Every lender is different with what criteria you or the property you would like to buy must meet. Here are some things to consider:
Some lenders may not lend on blocks of apartments with more than 5 floors. Others would consider lending on a block with up to 6 floors and there are also specialist providers with no limit on the amount of floors in the block.
If it’s a new-build property (which many Shared Ownership are) then you will need to find out what type of warranty is being offered as there a few not acceptable to certain lenders.
Whether you plan to further increase your share in the property: some lenders may want it to be possible for you to purchase further shares in the future up to 100% of the full market value - this is also known as staircasing. Some housing associations cap how much you can staircase so be sure to establish if they will ASAP.
Credit rating is not a huge deal-breaker for some lenders as it is possible to get a 100% Shared Ownership mortgage with bad credit, even with some types of adverse on your file. However, the better your credit profile then the better interest rate you may be eligible for as the lender would see you as less of a risk.
You will need to be a UK resident and have permanent right to reside, supply 3 years address history - but this does not have to be a UK address for the last 3 years.
If in full-time employment, it is likely you will need to have been in continuous employment for at least 12 months.
How do I get 100 percent Shared Ownership mortgage?
As we’ve already touched on there are a minority of lenders offering up to 100% Shared Ownership mortgages and best way to get one is to speak to a specialist Shared Ownership broker like the ones we work with, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry to get the right advice.
Know your credit profile, look at your credit file because you don't want to apply for certain products or with a certain lender that you are not eligible for due to late or missed payments, defaults etc. If you know your credit profile then the expert broker will have a much better idea of which lenders are likely to accept you for a 100% Shared Ownership mortgage.
Like all mortgages, be prepared. Get your proof of income ready whether that be payslips, accounts or self assessment from being self-employed, yearly entitlement statement for benefits. Get a few months’ bank statements ready, if you are unable to print them off via online banking then request them from the bank (this can sometimes take a few days).
Can I get a 95% Shared Ownership mortgage?
Yes, there are more lenders with an appetite to lend on 95 percent Shared Ownership mortgages, a few may also accept a history of bad credit.
If you have a deposit of 5% (some lenders may accept a gifted deposit from family) and only require a 95% Shared Ownership mortgage on the share of the property you’ll own, you will see the amount of lenders and options more than treble in comparison to the 100% Shared Ownership mortgages available.
This is less of a risk to a lender so not only does the number of product options increase, you could potentially benefit from cheaper interest rates. Having a 5% deposit means criteria is also relaxed with different lenders such as:
Not having to be continuously employed for a certain length of time.
Residing in the UK for a minimum of 12 months rather than 3 years for a 100% shared ownership mortgage.
The key is to speak to an expert on Shared Ownership mortgages to get the best advice for your circumstances.
It is also worth noting that some housing associations will sell a few properties for a 25% share. Based on a property with an open market value of £200,000 you would only need a £2500 deposit for a 95% mortgage of your 25% (£50,000) share, then leaving you to pay rent on the remaining 75% (150,000).
Can I get a 90% shared ownership mortgage?
This is where a few more household named lenders are competing against each other and driving interest rates down. If you can get a 10% deposit to put down on the share of the property you are purchasing then a 90% LTV Shared Ownership mortgage could mean lower monthly payments.
Many lenders will allow you to use a deposit you have been gifted from a family member or even friend, so, if you are lucky enough to be in that position you do not have to spend months or years saving.
If you have just started a new job, have been travelling for a few years or are a foreign national without definite rights to remain the good news is that you may be eligible to get a 90% Shared Ownership mortgage, as long as you have a 10% deposit.
As with all Shared Ownership mortgages it is very much a niche area so speaking to an expert about the options for your needs and circumstances and to get the best advice is paramount.
Speak to an expert on 100% LTV Shared Ownership mortgages
If you have questions about Shared Ownership mortgages or anything else in this article and want to speak to an expert for the right advice,call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.
Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.
*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA.Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...