Shared ownership costs are your mortgage, rent on the share you do not own, plus a service charge. Knowing what you pay each month, and what deposit you need to start, is the key to deciding if it works for you. This guide breaks it all down.
What you pay on shared ownership each month
There are three regular costs: the mortgage on the share you own, rent on the share you do not, and a service charge. Together they need to be comfortably affordable on your income.
Mortgage on your share
You only borrow against the share you buy, so the mortgage is smaller than on a full purchase. The rate and term work like any other mortgage.
Rent on the share you do not own
You pay rent to the housing association on the share they still own. It is set at a percentage of that share’s value each year, usually no more than 3%, and reviewed annually. To see how it is worked out, use the shared ownership calculator.
Service charge and any ground rent
As a leaseholder you pay a service charge towards maintaining the building and shared areas. Some older leases also have a ground rent. These vary by development, so always check the figures before you commit.
How much deposit do you need?
Your deposit is a percentage of your share, not the full property price, so it is usually much smaller than on a normal purchase, often 5% to 10% of the share. See how much deposit you need for a shared ownership mortgage, and our shared ownership mortgage advice for lenders who support it.
Do you pay full council tax on shared ownership?
Yes. Council tax is based on the property’s band, not the share you own, so you pay the full amount like any other resident. More detail in do you pay full council tax on shared ownership.
Solicitor and other buying costs
As with any purchase you will have conveyancing fees, searches, a mortgage valuation and possibly a broker fee. Shared ownership adds a little extra legal work because of the lease, so use a solicitor who knows the scheme.
Stamp duty on shared ownership
You can usually choose to pay stamp duty on the share you buy now, or make a one-off election to pay on the full market value. First-time buyer relief may apply. Which works out cheaper depends on the price and your plans, so take advice before you decide.
Work out your monthly cost
Put in a price, a share and a deposit and the shared ownership calculator estimates the mortgage, rent and monthly total. It is a guide, not a formal quote.
Getting the numbers right in Lincolnshire
We help buyers across Sleaford, Lincoln, Boston and Grantham work out the true monthly cost before they commit. New to it? Read how shared ownership works, then talk to us about shared ownership mortgage advice. Rent, service charges and stamp duty rules vary by home and change over time, so we confirm the current figures with you. Your home may be repossessed if you do not keep up repayments on your mortgage.
