Government-backed housing schemes offer many aspiring homeowners a great opportunity to climb the property ladder. What is the procedure for Shared Ownership and how much it costs can be known through the Shared Ownership Calculator. Many people are not aware of this so we have created a Shared Ownership Calculator which is very beneficial for people living in the UK and you can use our calculator to quickly see how much Shared Ownership will cost.
Shared Ownership Calculator
Understanding Shared Ownership
Shared ownership is a UK government scheme that helps people, particularly families, buy a home for less. In this scheme, you buy a part of the property (usually between 25% and 75%) and the remaining share remains with the housing association. This allows you to buy a home for less than full market value.
Some key features of shared ownership:
- Shared ownership: You buy a fixed percentage of the property and you have to take out a mortgage on that percentage.
- Monthly rent: You have to pay monthly rent to the housing association for the remainder of their ownership.
- Staircasing: You can increase your ownership stake over time through a process called ‘staircasing‘. In this you increase your stake by buying additional ‘shares‘.
- Sale: You can sell your shared ownership property, but this involves a slightly different process than a traditional property sale.
Financial Considerations in Shared Ownership
- Deposit: Although less than a traditional mortgage, you will need to pay a deposit (about 10% of the property’s share).
- Mortgage: You will need to get a mortgage for the initial purchase.
- Monthly expenses: In addition to mortgage repayments, you will have to pay monthly rent, service charges (building maintenance) and possibly council tax.
- Staircasing Costs: While extending ownership (staircasing), you have to pay legal and valuation fees.
How Shared Ownership Rent is Calculated
Simply put, you pay rent as a percentage of the total market value of the home you have purchased. It is based on a concept called unsold equity, which is the remaining portion of the property other than the portion you purchased.
Important points:
- Rent: This is based on a percentage (around 2.75% to 3%) of the property’s total market value, not just your purchased portion.
- Unsold Equity: This represents the portion of the property owned by the housing association (landlord) (100% – your purchased portion %).
- Percentage: Rent is applied to the unsold equity, not the entire property value.
For example:
Let’s say you bought a 50% share for £200,000. This means the unsold equity is £100,000 (100% – 50%). If the rental rate is 2.75%, you will pay £2,750 (2.75% * £100,000) in rent per year.
Here’s the calculation formula:
Monthly Rent = (Market Value of Property x Unsold Equity Percentage) x Rent Percentage / 12Shared Ownership Calculators UK
Our Shared Ownership Calculator can give you an estimate of the costs involved in shared ownership, making budgeting and financial planning even easier.
Comparison: You can compare costs for different properties and locations using our Shared Ownership Mortgage Calculator, helping you choose the right property for your needs and budget.
Important Factors: Our Shared Ownership Rent Calculator takes into account factors that affect your financial commitment, such as property value, your investment percentage and mortgage rate, and gives you an idea of all the costs associated with investing.
How to use Shared Ownership Calculator
- Simply visit Shared Ownership Calculator by this Link
- Enter Full Property Value, Share Percentage, Annual Rent Percentage, Mortgage Rate, Mortgage Terms in Years.
- Then hit Calculate button
- Then you will see Shared Ownership Cost details on your screen
Effective Strategies for a Successful Shared Ownership Journey
- Seek expert advice: Seek the help of a financial advisor or mortgage advisor to guide you as per your needs and capabilities.
- Do the research: Compare different housing associations and their shared ownership schemes. Find out about eligibility, property types and costs.
- Think about the future: Consider how shared ownership fits into your long-term plans. Do you consider outright ownership, or is this a stepping stone to a future purchase?
- Account for all expenses: Consider expenses beyond mortgage and rent. Include sales fees, appraisal fees and exit fees. use our Calculator to Calculate Shared Ownership Cost
- Negotiate: Negotiate for a better deal to make sure you get the right price.
These tips will help you make wise decisions on your shared ownership journey and help you get the keys to your dream home!
FAQ on Shared Ownership Calculator
What is shared ownership?
Shared Ownership is a scheme where you can buy part of the property (usually 25% to 75%) and rent out the rest.
What is a shared ownership calculator?
A shared ownership calculator is a tool that helps potential buyers estimate how much it will cost to purchase a shared ownership property.
What information do I need to use a shared ownership calculator?
You need the price of your property, the percentage you want to buy, your deposit amount, the interest rate on the mortgage and the estimated rent on the remaining share.
Can I use the calculator if I’m unsure of the share percentage I want to buy?
Yes, you can input different share percentages to see how they affect the total cost and decide which option is the most affordable for you.
Additional Resources
- Homes England:https://www.gov.uk/shared-ownership-scheme (Information on shared ownership and finding a shared ownership property)
- National Housing Federation:https://www.housing.org.uk/ (Information on shared ownership and resources for buyers)
- Money Saving Expert:https://www.moneysavingexpert.com/mortgages/shared-ownership-scheme/ (Financial advice and considerations regarding shared ownership)