Shared Ownership is a way for first time buyers who can’t afford to purchase a home outright to get on the property ladder. The combined cost of the mortgage on your share of the home and the monthly subsidised rent on the share that you don’t own usually works out cheaper than buying on the outright and often not much more than renting privately. There are various upfront costs that you need to consider whenbuying a Shared ownership home and we advise that you should budget approximately £3,000 on top of your deposit to cover additional costs associated with buying your home, however this is just a guideline and it is recommended that you research all costs fully before you proceed with your purchase. Costs to consider when buying a Shared Ownership Home include:
The Reservation Fee: Reservation fees will differ for each Housing Association but as a general rule this is usually in the region of £500. Your reservation fee will typically be offset against your rent or service charge account when the sale completes, but check with your housing provider regarding the terms and conditions of this payment.
Deposit: Minimum 5% of the share you are buying – For example if the share you are buying is £100,000 you will require at least £5,000 as a deposit.
The Mortgage and Valuation Fee: £300-£450 – This cost is for the valuation of your property which your mortgage lender will arrange.
Mortgage Arrangement Fees: £400-£800 – Some lenders charge an arrangement fee for mortgages with fixed interest rates. These fees vary in cost but generally the longer the interest rate is fixed for, the higher the fee.
Solicitor’s Fees: £600-£1000 – These fees usually include Land Registry fees, local search fees and other expenses, excluding stamp duty.
Stamp Duty: Dependant on Property Value – This is a government tax on buying on buying a property. Your Solicitor will be able to advise you on this and further details are available at www.hmrc.gov.uk/sdlt
Advance Rent and Service Charge: On completion of your purchase, your first month’s rent and service charge will usually be payable. Check with your housing provider regarding when this will be due.
Removal Costs: if you plan to use a removal company, we recommend that you get a selection of quotes as costs may vary.
We also have a tailormade, easy to follow, step-by-step guide and video which you may wish to consult at https://www.hydenewhomes.co.uk/shared-ownership
Written by: Katie Sheehan
Sales Manager, Hyde New Homes