Client
A first-time buyer purchasing their first home through the Shared Ownership scheme. The plot was already reserved and the deposit paid.
Objective
A mortgage on a 25% share of a new build, bought from a housing association, against an exchange date the developer had already fixed.
Situation
The plot was reserved before any finance was arranged. Construction was nearly finished and the housing association had set the exchange date.
That date had money attached to it. Reservation agreements on new build plots carry fees and penalties where the buyer fails to exchange on time, and the plot itself can go back on the market. Everything else on the case had to work around it.
Shared ownership cuts the lender list before anything else is considered. The buyer mortgages only the share being bought and pays rent to the housing association on what is left, and a large part of the market will not lend against that arrangement in any form. Among the lenders that do, several set a floor on the share size. A 25% share falls under that floor with more than a few of them.
Challenges
- An exchange deadline set by the developer, with fees and penalties attached to missing it
- A 25% share, at the low end of what shared ownership lenders will accept
- A first-time buyer with no prior mortgage or property experience
- A new build valuation to be completed inside the timescale
What We Did
Three requirements had to be met by one lender: shared ownership accepted, a minimum share of 25% or below, and enough capacity to issue an offer before the deadline.
Plenty of lenders satisfy the first two and fall down on the third. Several of the obvious shared ownership names were running long queues at the time, so turnaround was doing as much work in the decision as criteria were. We placed it with a high street lender rather than a specialist, which held the rate down as well. A first application of any kind turns on the same fundamentals, and whether you can get a mortgage comes down to income, deposit and credit before the scheme is even reached.
The valuation was done by desktop, so no surveyor visit needed booking and several days came out of the timeline.
Solution
A high street lender accepting the shared ownership purchase at a 25% share, valued by desktop.
Outcome
A mortgage offer issued within one week of the full application being submitted. The legal work completed in time and the client exchanged by the deadline, with no penalties or additional fees incurred.
Conclusion
Shared ownership gets talked about as a way to afford a first home, and much less as a lending problem, which is where these cases are actually won or lost. Share size, the lease the housing association is using and how quickly a lender is currently working all feed into whether the buyer exchanges on the developer’s date. Here the desktop valuation bought more than a slightly better rate would have. Choosing between a part share and a smaller property bought outright is worth working through as part of a wider mortgage strategy rather than in isolation.
Frequently Asked Questions
Can you get a mortgage on a 25% shared ownership share?
Yes, with fewer lenders to choose from. A minimum share of 25% is a common condition, and some set it higher, so the size of the share is one of the first things checked when the case is placed.
How long does a shared ownership mortgage offer take?
Anything from two to four weeks, driven by the lender’s queue rather than by the shared ownership element itself. With a developer deadline in play, check where a lender’s service levels are sitting before submitting.
What happens if you miss a new build exchange deadline?
Fees or penalties usually apply under the reservation agreement, and the developer can release the plot back to the market. Whether the reservation deposit is returned depends on the terms signed at the outset.
Do all lenders accept the Shared Ownership scheme?
No. Much of the market declines shared ownership outright. Those that lend differ on minimum share, lease requirements and how much new build they will take, so access across the whole market counts for more here than on an ordinary purchase.
Final Thoughts
A share of a new build puts a first-time buyer on the developer’s timetable, with a financial penalty for slipping behind it. What settles the case is getting in front of a lender that both accepts the structure and can process it in the time available, and that is worth knowing before the reservation is signed rather than afterwards.
UK Mortgage Broker is a whole-of-market broker, directly authorised and regulated by the Financial Conduct Authority. Circumstances vary and the result here reflects these clients alone. It is not an indication of terms available to others. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call 01628 969 500 or email info@uk-mortgagebroker.co.uk to speak with a qualified adviser.
Related Pages
- Shared Ownership Mortgages – How the scheme works, what lenders accept and staircasing to a larger share.
- First Time Buyer Mortgages – Deposits, schemes and what lenders expect from a first application.
- Residential Mortgages – Purchases and remortgages for a home you live in.
- How Much Can I Borrow – What your income and outgoings come to on a part share.
- Mortgage Rates UK – How deposit size and lender type affect the rate offered.