Post Credit Crunch - How To Get A 100% Mortgage
- By David Farrell
- Published 07/1/2009
- Buying
- Unrated
First-time homebuyers often have a difficult time entering into the housing market. It can be challenging to get into a financial position that allows for a large enough cash deposit and subsequent cash flow to finance an entire property on one's own. This is where a shared ownership mortgage comes into play. With a shared ownership mortgage, the homebuyer doesn't automatically have to come up with the full purchase price of the property. Instead, he can share the cost with a third party at the beginning and gradually purchase up more and more of the property until he is the proud owner of the entire piece of real estate by himself.
The first step in pursuing a shared ownership mortgage is to determine whether you qualify for such an arrangement. This can be done through a shared ownership agent, who can walk you through the process. These agents help you find situations where you are allowed to "part buy, part rent" a home by sharing the cost with a housing association. You can determine how much you want to deposit toward the property, which usually amounts to 25 to 50% or more of the cost. A qualified agent can also help you set up staircasing so you can work towards owning the property as you can afford it. Most staircasing programs include a time limit and a standard amount you are required to add. A typical staircasing scheme allows you to add 25% at a time, until
the property is solely owned by you.
When you determine how much you are going to pay into the property, you can also find out how much additional rent you will be charged in your shared ownership mortgage. In most cases, rent amounts are determined by how much you make and how much money you are putting toward ownership. Rent is paid to the housing association that is also an owner in the property. Another factor is how much of a deposit you will put down on the property. In some cases, a 100% mortgage is available, but the housing association may require some safeguards like protection clauses included in the mortgage.
In many cases, lending institutions see a shared ownership mortgage as a risky proposition. This is because people who typically apply for these packages may not be the most financially stable applicants. However, if you shop around, you should be able to find competitive rates and terms that will work well in your own financial situation. It may help to use a shared ownership agent who is familiar with the lending institutions that typically provide a shared ownership mortgage, since this person can assist in finding the best deal for your unique situation.
A shared ownership mortgage can make home ownership possible even when you can't afford the full price of the property. While these loans can be more challenging to come by, the time spent shopping can be worth the effort when you end up with a property you love and can afford.
The first step in pursuing a shared ownership mortgage is to determine whether you qualify for such an arrangement. This can be done through a shared ownership agent, who can walk you through the process. These agents help you find situations where you are allowed to "part buy, part rent" a home by sharing the cost with a housing association. You can determine how much you want to deposit toward the property, which usually amounts to 25 to 50% or more of the cost. A qualified agent can also help you set up staircasing so you can work towards owning the property as you can afford it. Most staircasing programs include a time limit and a standard amount you are required to add. A typical staircasing scheme allows you to add 25% at a time, until
When you determine how much you are going to pay into the property, you can also find out how much additional rent you will be charged in your shared ownership mortgage. In most cases, rent amounts are determined by how much you make and how much money you are putting toward ownership. Rent is paid to the housing association that is also an owner in the property. Another factor is how much of a deposit you will put down on the property. In some cases, a 100% mortgage is available, but the housing association may require some safeguards like protection clauses included in the mortgage.
In many cases, lending institutions see a shared ownership mortgage as a risky proposition. This is because people who typically apply for these packages may not be the most financially stable applicants. However, if you shop around, you should be able to find competitive rates and terms that will work well in your own financial situation. It may help to use a shared ownership agent who is familiar with the lending institutions that typically provide a shared ownership mortgage, since this person can assist in finding the best deal for your unique situation.
A shared ownership mortgage can make home ownership possible even when you can't afford the full price of the property. While these loans can be more challenging to come by, the time spent shopping can be worth the effort when you end up with a property you love and can afford.
David Farrell
David Farrell is Managing Partner of Affordablemortgages.co.uk a mortgage advice practice offering advice on best mortgage deals across the UK
View all articles by David Farrell