Shared Ownership Mortgages

What is a Shared Ownership Mortgage?  A Shared Ownership Mortgage is a Mortgage taken out Jointly by two or more people on a property that is jointly owned.  A conventional Joint Mortgage is a Shared Ownership Mortgage taken out by a married or cohabiting couple.  However, some mortgage lenders will now provide a mortgage to two, three or four friends, relatives or colleagues who choose to buy a house between them.

Benefits of a Shared Ownership Mortgage  Buying a house is an expensive business.  Buying your first house can seem impossible.  And yet paying rent on a house may cost as much or more than paying a mortgage.  Buying a house jointly - with friends, relatives or colleagues - may mean you can borrow more.  Some mortgage lenders will take up to four salaries into consideration. The deposit and legal fees required to buy a house can also be split several ways, not to mention the costs of owning and maintaining a house.

Not only may several people together be able to buy a house more cheaply than they could rent, but they would also own the house as an investment.  Frequently, although it has to be said - not always - an investment that outperforms many others.

Drawbacks of Shared Ownership  There will most likely come a time when one of the owners want to move - what are the options?  They may move out, but retain their ownership and liabilities, possibly renting out their portion of the house.  The other joint owners may buy them out of their share.  They may sell their share to a new joint owner, or everyone sells the house and takes their share of the proceeds.  There is lots of potential for this being complicated or not meeting the wishes of all of the owners.

Contracts will need to be drawn up between the joint owners to cover the various possibilities.

As joint owners, everybody is liable for payment of the mortgage, irrespective of their personal circumstances and whether or not they still live in the property.  On the one hand, as a Joint owner, you will not just be able to "up sticks" and move without considering your other co-owners; on the other hand, if one of the other co-owners does just that - you may find yourself being pursued by the mortgage lender for the whole of the repayments.

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Shelter: Mortgage arrears for joint mortgages

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