Shared Ownership: A First-Time Buyer’s Guide

If you're a first-time home buyer considering a shared ownership property, you're not alone. Shared ownership can be a great solution to get on the property ladder when you can’t afford to buy outright. In this guide, we’ll walk you through what shared ownership is, how it works, its benefits and challenges, and how you can use Klink to make the process easier.

 

What Is Shared Ownership?

Shared ownership is a government-backed scheme designed to help first-time home buyers purchase a home. With this scheme, you buy a share of a home (usually between 25% and 75%) and pay rent on the remaining portion. The housing association owns the other share, and you pay a below-market rent on the portion you don’t own.

This is an excellent option for first-time home buyers who can’t quite afford a home on the open market.

 

Who Is Eligible for Shared Ownership?

To qualify, you’ll usually need to:

• Be a first-time buyer, or no longer own a home

• Have a household income below £80,000 (or £90,000 in London)

• Be unable to afford a suitable home on the open market

• Pass affordability checks from the housing association and mortgage lender

 

How the Buying Process Works

1. Find a Shared Ownership Property: These are often new builds or homes offered by housing associations. You can find them through developers or on property portals with a shared ownership filter.

2. Check Your Finances: You’ll need a deposit (usually 5% or more), plus mortgage approval. This is where Klink can help. Our Home Goal feature lets you set your target deposit and see a timeline for when you could reach it. Spending Insights show you where you could be saving more each month.

3. Apply and Reserve: You’ll apply through the housing association or developer, then reserve the home with a fee (often around £500).

4. Affordability Checks: Your mortgage lender and the housing association will assess whether you can afford the share and rent. Klink’s Mortgage Readiness tool can help prepare you for these checks.

5. Get a Mortgage: You’ll need a mortgage broker who deals with shared ownership. Your loan will be for your share only, not the whole property value.

6. Legal Work and Exchange: Once the legal work is done, exchange contracts and prepare for your move.

 

Benefits of Buying a Shared Ownership House

• Lower deposit: Since you're only buying a portion, the deposit required is smaller.

• Easier Path to Ownership: It gives you a way into homeownership sooner.

• Staircasing: You can buy more shares later (even up to 100% in most cases).

• Affordable Rent: The rent on the unsold portion is typically lower than market rent.

 

Challenges of Shared Ownership

• Rent and service charges: You pay rent and a mortgage, plus service charges - so it’s not always cheaper monthly than buying outright.

• Limited lenders: Not all mortgage providers offer shared ownership mortgages, so you may have limited options.

• Leasehold issues: Many shared ownership properties are leasehold, meaning you could face ground rent and other lease restrictions.

• Selling isn’t as straightforward: You usually need to offer the property to the housing association or eligible buyers before putting it on the open market.

• Staircasing costs: When buying more shares, you’ll incur legal and valuation fees.

 

Living in a Shared Ownership Home

Once you’ve moved into your shared ownership property, you'll make monthly payments, including your mortgage, rent, and service charges. If you decide to buy more shares (staircase), you’ll need to pay for property revaluation, legal fees, and possibly remortgage.

Klink’s Home Goal tool can help you plan for staircasing and visualize your financial goals

 

Is Shared Ownership Right for You?

It’s a good option if:

• You have a limited deposit

• You want a new build or a modern home

• You're comfortable with the leasehold structure and additional costs

It might not be the best fit if:

• You want full control and flexibility from day one

• You plan to sell and move within a few years

• You have enough deposit and income to buy outright

 

How Klink Supports Shared Ownership Buyers

Klink is designed to help first-time home buyers with tools to plan and manage their finances. Whether you're looking to buy a shared ownership house or save for a full deposit, Klink can help:

• Set a Home Goal and track your savings progress

• Get Mortgage Readiness insights based on your banking behaviour

• Cut unnecessary spending with our Spending Insights feature

• Access articles and quizzes to help you learn about the home-buying process

 

Final Thoughts

Shared ownership houses offer an affordable path to homeownership, especially for first-time home buyers. However, they come with complexities, so it's important to understand the costs, responsibilities, and limitations before diving in.

Klink can help you untangle the jargon, plan your budget, and get your finances in shape so that whether you’re buying a 25% share or planning to staircase to 100%, you’ll feel in control.

Download Klink today and take your first step towards owning your home - your way.