Have You Heard Of Co-ownership? Here’s Everything You Need To Know
Saving up for a deposit for your first home has always been a bit of a challenge, hasn’t it?
But now, with new statistics revealing that the average length of time for someone in the UK to save up for a deposit for a house is an amazing ten years (or 15 in London), many people are now faced with the prospect of having to live with their parents until they’re at least 30.
Co-ownership can remove that panic…..
What exactly is co-ownership?
Co-ownership has actually been around for quite a few years and has helped thousands of people get onto the property ladder. It simply means that you buy a share of a house and co-ownership buys the rest, so you’re only paying the mortgage on your proportion.
Co-ownership is a really affordable way of buying a house. You will pay your mortgage on the portion that you own and then pay rent on the other part. Rent is charged at 2.5% of the value of the Co-ownership share of your home e.g. if your home is valued at £120,000 and you own 50% the annual rent is £1,500 or £125 per month.
Sound good?
Well, here’s the really good news….with co-ownership, you don’t need to pay a deposit!
Let’s look at how it works
Say you see a house you wanted to buy at £120,000. Normally you’d need a 10% deposit (£12,000) and your repayments on a 35-year mortgage would be £367 per month (on a 2.18% deal).
With co-ownership, you put down zero deposit and your rent and mortgage combined (on a 50/50 co-ownership deal) would be a total of £345 per month!
Check out the monthly rental table below to get an idea of how much rent you would pay
Can anyone buy through co-ownership?
The majority of applicants are first-time buyers, but it can also help people who have owned a house before. The key criteria are:
- You are over 18 and live in the UK
- You do not currently own any property or land anywhere (exception for co-ownership portability cases)
- You will live in the property as your only residence and will not use the property for business purposes
- You have an adequate right to reside in Northern Ireland
- You have had no payday loans or home credit within the last twelve months
- Any Debt Relief Orders, bankruptcies or Individual Voluntary Arrangements must have been satisfactorily completed at least six years before applying
- You have no outstanding adverse credit at the time of making a co-ownership application
Other useful co-ownership facts
- You can choose to own between 50%-90% of the property.
- You can buy a house using co-ownership up to a maximum value of £165,000.
- You need to be in your job six months (or have two years’ accounts if self-employed).
- Affordability checks will be carried out by the lender.
- You can take mortgages out up to 35 years with two, three or five-year deals – either fixed rate or variable.
- You can stay on co-ownership until the end of your mortgage term (although you will still only own a proportion of your house then).
- There is an assessment fee of £70 and a property fee of £430 that covers your valuation fee and most of the legal fees involved in purchasing your home.
- If your house depreciates in value, if you sell it, you only have to repay the same proportion that you own. The same goes for if it increases in value.
So who can apply?
You can apply as an individual, with your partner or even with a friend. Co-ownership isn’t for everyone and at Crawford Mulholland we have access to some incredible deals that may be a better solution for you. Co-ownership does, however, offer many people a door into property ownership that would otherwise be unattainable or a long way off.
This all sounds amazing, is co-ownership the best deal for me?
Everyone’s circumstances are different, so get in touch with the Crawford Mulholland Team today to book an appointment and find out if co-ownership is the perfect deal for you and your situation.
Co-ownership isn’t a long-term solution, but it’s a great ‘leg-up’ to get you going.
