05 Nov 5 Benefits of Shared Property Ownership
5 Benefits of Shared Property Ownership
Property ownership is becoming a distant dream for many people today. However, there are a couple of clever tricks you can utilise to get yourself on the property ladder without necessarily having to purchase a new home outright. Shared ownership is an increasingly popular means of achieving this.
Below are five key benefits of shared property ownership.
The Deposit Is Smaller
When compared to purchasing a new property outright, entering into a shared ownership agreement means that you can significantly reduce the cost of your mortgage. Property buyers purchasing their property under a shared ownership scheme will usually spend between 25-75% of the market value.
This reduction can be enough to bring a £30,000 deposit down to just over £3000. For many people, these savings are the difference between being able to afford a property and having to rent.
You Can Grow Your Equity
Despite paying a relatively small deposit upfront, shared ownership can still enable you to benefit from a growing equity rate in a property. If your home increases in value as you pay your mortgage, this increase in value could eventually help you if you decide to sell your share in the property.
Suppose that you buy a 50% share of a home worth £120,000. If that property increases in value to £150,000, you can sell your stake for 50% of this higher value instead of the initial amount you paid. In this case, you would make £75,000 instead of £60,000.
You Can Purchase Wherever You Want
Opting for a shared ownership scheme instead of purchasing a property outright does not have to restrict your choice of location. For example, if you have your heart set on a property in Manchester, Onward Living provides shared ownership properties throughout the city. These properties are located in some of Manchester’s most desirable areas; they sit shoulder-to-shoulder with the regular properties on the market.
The term staircasing refers to the purchasing of ever-greater shares on a shared ownership property. Virtually any property purchased under a shared ownership scheme can be ‘staircased’. The vast majority of developers offering shared ownership properties allow for this form of equity purchasing. However, many will cap the total amount of equity that you can own in the property to 75% at the most. Some developers allow you to staircase your way to the full 100%, but these are relatively rare.
Reduce Your Monthly Costs
Even when you factor in the costs of mortgage repayments in addition to rent, most shared ownership properties are cheaper than a comparable property rented privately. Investing in shared ownership properties is, therefore, a legitimate way of reducing your monthly living costs without necessarily having to downscale your living arrangements.
These are just some of the benefits of shared property ownership. If you are one of the many people today looking to become a property owner, but you lack the funds and resources to purchase a property outright, shared ownership could provide the ideal solution.