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Financial
Services > Mortgages
> Shared Property
> Shared Ownership Mortgages
The
mortgages
available on shared ownership are somewhat limited as some lenders
feel that shared ownership is more risky than more traditional
loans. This is probably due to the fact that these schemes were
originally available to help financially insecure members of society.
The fact that a third party i.e. the Housing Association has to
be brought into the legal framework might also make them slightly
wary. However, as house prices have risen, a much larger cross
section of the general public are looking at shared ownership
as a means of getter on the property ladder and therefore, some
lenders will now offer 100% mortgages on shared ownership schemes.
You will need to select a mortgage that is not only suitable to
your type of purchase, but also one that fits in with your financial
position. Repayment
mortgages are the most straightforward way of repaying your
loan. With this type of mortgage you make regular monthly repayments
so that at the end of the mortgage term (usually 25 years) the
debt and interest is totally repaid.
Variable
rate mortgages offer interest rates that will vary according
to the base rate set by the Bank of England. If base rates vary
i.e. rise or fall, the lender will generally alter their lending
rates accordingly. Before entering into a variable rate mortgage
you will need to consider whether rates are likely to change in
the foreseeable future.
Fixed
rate mortgages offer an interest rate that will remain static
for a specific period of time. This could be as little as a year
or up to ten years although generally speaking the average term
is about 4 - 5 years. Some fixed rate mortgages revert to the
standard variable rate at the end of the fixed term.
Discounted rate mortgages offer the standard variable rate less
a fixed percentage discount. Again this is usually for a specific
time and at the end of the term the borrower reverts to the standard
variable rate.
As a person looking for a mortgage for a shared ownership, you
may find that the discounts usually available to first time buyers
do not apply.
If you want to take out a mortgage and you are on income support
a lender would need to consider your application very carefully.
Generally speaking a lender will usually only lend to someone
in regular employment, who would be able to meet his or her monthly
mortgage repayments. If you are on income support, you will need
to approach your local Department
for Work and Pensions office (DWP), formerly the DSS, to see
whether they would be prepared to repay mortgage interest payments
through income support. A lender will not usually approve a mortgage
until they are received confirmation from the DWP that the repayments
will be met. Contact your local DWP for more details.
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