Can't Get On The Property Ladder? Then Look No Further Than A Shared Mortgage
Can't Get On The Property Ladder? Then Look No Further Than A Shared Mortgage
How are people still getting onto the property ladder I hear you ask? Gone are the days when you could get a 95 or 100% mortgage, and incomes have been dropping during the recent financial turmoil - so how can you get into property as an investment with a low income?The most popular of the 'new ways' of getting a property are to enter into a shared mortgage. Normally a housing association or company will buy a percentage of the property with you so the mortgage you have to look for is lower, as you are only financing your share. It's a great option for those who are single and/or have a low income to start with.These types of mortgages have greatly increased in popularity in recent years as it has become very difficult for first time buyers to get on the property ladder unless they have a large deposit available to them, so there are plenty of great deals available out there if you shop around.You will only own the part that you take the mortgage on. In most cases the housing association will buy anything from 25-50% of the property, and you will buy the remaining share, so you won't own their 25 or 50% and you must remember this.As shared ownership mortgages are less risky, banks and lenders are happier to authorise mortgages as they are only lending a smaller amount than for a full mortgage. Despite it being easier to get a shared mortgage, the mortgage market as a whole is still subdued from the Credit Crunch, so doing a bit of shopping around will be required.It is possible to purchase your property incrementally through a 'staircase' option. This option means that you can purchase more of the property from the housing association later on. Check with your scheme provider if this option is available as it is not standard in all deals, but well worth taking up if it isUnless you have a large deposit available, it can be tough to buy a property in the current market. So, it is no surprise that shared ownership schemes have grown in popularity over recent years. And, there are some good deals in the market if you are prepared to research what is available.Because of the complex nature of a shared mortgage, it is best to talk to a qualified and independent financial adviser (IFA) or mortgage broker to be certain and have any small print clarified so as to avoid any nasty surprises further down the road. Their expertise can also help make the extra hassle much easier to navigate and control, just keep mind that a fee would have to be paid for this service.Whilst shared ownership deals are great for many people, remember that there are disadvantages. For example, as you are not the sole owner of your home, you may need permission should you wish to alter your home in any way. Redecoration, a new bathroom or an extension may need the permission of the party that owns the other share.Shared ownership schemes have helped many people buy their first home. Rather than paying rent which doesn't benefit you, owning a share in your home means you can benefit from increases in its value and from getting on the property ladder.