How Shared Ownership Mortgages Work in the UK
For many homebuyers, saving enough for a full mortgage deposit can feel out of reach. Shared ownership mortgages offer a practical alternative – you buy a share of a home and pay rent on the rest, making monthly costs more manageable and the path to ownership genuinely achievable.
This guide explains how the shared ownership scheme works, who can apply, and how a specialist broker can help you find the right deal.
How Shared Ownership Works
Supported by the UK government, shared ownership lets homebuyers who can’t afford the full value of a property own part of it and rent the rest. You can buy a share of between 10% and 75%, and pay a housing association rent on the remainder.
You can increase your share over time through a process called staircasing (more on this below).
Here’s how the process works:
- You apply for the scheme through a developer or housing association.
- You take out a shared ownership mortgage and buy your initial share.
- You pay rent on the share you don’t own.
- Over time, you can buy additional shares as your finances allow.
Many buyers use shared ownership calculators to work out what they can afford – covering the deposit, mortgage interest, rent and monthly payment in one view.
Eligibility Criteria
Eligibility for shared ownership is broader than many people expect. You may qualify if you meet the following requirements.
General Requirements
- Total household income of £80,000 or less (£90,000 or less in London).
- You do not currently own a home, or you are in the process of selling one.
- You have a good credit history and can pass affordability checks.
Additional Criteria
- You are a first-time buyer, a former homeowner, or a current shared ownership tenant.
- You meet the housing association’s local priority rules, which may give preference to key workers or people already living in the area.
Shared ownership mortgage lenders use an affordability calculator to check that your income is sufficient to cover the mortgage, rent and service charges combined.
Benefits of Shared Ownership
Shared ownership is growing in popularity across the UK for good reason. Here are the main advantages:
1. Lower Deposit Requirements
Your deposit is based only on the share you buy, not the full property value. This significantly reduces the up-front cost compared to buying outright.
2. More Manageable Monthly Payments
Your monthly costs typically combine:
- Your share of the mortgage repayments
- Rent on the remaining share
- Any service charges
In most cases, the total is still lower than renting privately or taking out a full mortgage.
3. A Path to Full Ownership
Shared ownership lets you buy additional shares over time – at your own pace and when your finances allow – until you own the property outright.
4. Access to New-Build Homes
Most shared ownership properties are new builds, which typically offer better energy efficiency, lower maintenance costs and modern finishes.
5. Security and Stability
Shared ownership gives you a secure, long-term home on a long lease, along with the benefit of building equity on the share you own.
Limitations to Consider
Shared ownership has real benefits, but it’s also worth understanding the potential drawbacks before you commit.
1. Rent + Mortgage + Service Charge
Your monthly outgoings could include all three costs simultaneously. It’s important to use a shared ownership calculator to check the full combined figure is genuinely affordable for you.
2. Leasehold Restrictions
Most shared ownership homes are leasehold. Depending on the property, this may mean:
- Service charges
- Ground rent (varies by property)
- Restrictions on subletting
3. Selling Can Take Longer
When you come to sell, the housing association typically has the right to find a buyer first. This nomination period can take longer than selling on the open market.
4. Limited Lender Options
Not all lenders offer shared ownership mortgages. Working with a specialist broker gives you access to the lenders who do – including those offering competitive terms that aren’t available direct.
5. Staircasing Costs
Each time you buy additional shares, you’ll typically need to pay for a valuation, legal fees and processing costs. It’s worth factoring these into your long-term budget.
Staircasing Explained
Staircasing is the process of buying additional shares in your shared ownership property. Under the current scheme, there are two ways to do this:
- Gradual staircasing: You can purchase additional 1% shares each year for up to 15 years. This makes the process easier to plan and budget for incrementally.
- Standard staircasing: If you want to increase your share by more than 1% at a time, the usual minimum is 5%. Some older leases may require larger increases – such as 10% or even 25%.
The minimum share you can purchase depends on the terms of your lease and whether your property falls under the newer or older shared ownership model.
How Staircasing Works
The housing association arranges a valuation to establish the current market value of your home. You choose how many additional shares to buy, then fund that purchase through your mortgage or savings. As your ownership share increases, your rent reduces by a proportional amount. Once you reach 100% ownership, rent stops entirely. Staircasing gives you a clear, structured path to full ownership as your income grows.
How We Can Help
Shared ownership mortgages involve a number of steps, affordability checks and lender requirements – but we make the whole process straightforward.
- Finding the Best Shared Ownership Mortgage Rates – We compare both mainstream and specialist lenders to find the most competitive deal for your situation.
- Access to Specialist Lenders – Some shared ownership mortgage products are only available through brokers. We give you access to those lenders and the terms they offer.
- Accurate Affordability Calculations – We use specialist tools to check that your mortgage, rent and service charges are all comfortably within your budget.
- Eligibility and Documentation Support – We help you pull together everything you need, including:
- Proof of income
- ID and credit checks
- Proof of deposit
- Housing association application forms
- End-to-End Application Management – We liaise with all parties throughout the process on your behalf, including:
- Mortgage lenders
- Housing associations
- Solicitors
- Valuers
- Property developers
- Estate agents
Frequently Asked Questions
What is a shared ownership mortgage?
A shared ownership mortgage lets you buy a share of a home and pay rent on the part you don’t own.
It’s designed to help people who can’t afford to buy a property outright get onto the property ladder with a smaller deposit and lower monthly costs.
Is shared ownership only for first-time buyers?
No – shared ownership is not only for first-time buyers.
Anyone who can’t afford a suitable home on the open market may apply, including people who previously owned a home.
How much of the property do I have to buy at the start?
You usually buy between 10% and 75% of the property to begin with.
You can buy more shares over time through staircasing if your budget allows.
Do I pay rent as well as a mortgage?
Yes – you pay rent on the share you don’t own and a mortgage on the share you’ve bought.
Most people find the combined total still works out cheaper than buying the whole property outright, but it’s important to look at the full monthly figure before committing.
Who is eligible for shared ownership?
You need a household income under £80,000 (£90,000 in London) and must be unable to afford a suitable home on the open market.
You also need to pass affordability checks covering the mortgage, rent and any service charges.
Can I get a shared ownership mortgage with bad credit?
Yes – it’s still possible, depending on the lender.
Some lenders are more flexible than on standard mortgages, but you may need a slightly larger deposit. Speaking to a specialist broker first helps identify which lenders are the best fit for your credit profile.
What happens if my income changes?
If your income falls, you still need to keep up with the mortgage and rent – so getting in touch early is important if you think you’ll struggle.
If your income rises, you may be able to buy more shares, which would reduce the rent portion of your monthly payments.
Can I sell a shared ownership property?
Yes – you can sell whenever you want.
The housing association normally gets the first opportunity to find a buyer. If they don’t find one within the nomination period, you can sell on the open market.
Are shared ownership homes freehold or leasehold?
Most shared ownership homes are leasehold.
This means a management company or housing association is responsible for the building or estate. You’ll usually have additional costs such as service charges or ground rent, so it’s worth checking these before you commit.
Related Pages
- First-Time Buyer Mortgages – dedicated mortgage advice for buyers getting onto the property ladder for the first time
- Residential Mortgages – full residential mortgage advice for main home purchases
- How Much Can I Borrow? – income multiples, affordability and what lenders look at when assessing your application
- Mortgage Affordability – understanding how lenders assess what you can afford each month
- Can I Get a Mortgage? – eligibility criteria and the factors that affect mortgage approval
- Types of Mortgage in the UK – fixed, tracker, interest-only and repayment mortgages explained