Shared ownership mortgages
Only available in England and Wales
The maximum LTV we will consider lending on shared ownership properties is 90% (85% for new build houses / bungalows and 80% for flats) of the value of the share of the property the applicant(s) is buying / will own (not the full market value of the whole property).
The minimum valuation for all residential lending is £40,000 (for shared ownership value of share must be at least £40,000).
The following rules apply to shared ownership properties:
- The monthly rental payment must be keyed to the "Shared Ownership Rent" field in Mortgage Pro. If the rent varies or increases over time, the higher amount must be keyed.
- An applicant(s) minimum share must be for at least 25% and the maximum share on initial purchase cannot exceed 85%.
- The applicant(s) initial purchase is based on a long lease (minimum of 70 years or 123 years on all new build properties) and may be for as low as a 25% share. The applicant(s) can purchase further shares in the property, reducing the rent they pay and increasing their ownership of the property. Increasing the shareholding is known as ‘staircasing’.
- The mortgage must be conducted on a full repayment basis.
- The facility to transfer the mortgage to full or part interest-only is not available whilst the mortgage is conducted on a shared ownership basis.
Shared ownership remortgage
When keying Shared Ownership remortgages, the value of the applicant's share should be entered in the "Estimated Value of the share" and the full market value in the "Full Market Value" box. This will ensure the correct product is provided for selection.
Shared Ownership remortgages should be processed using the Shared Ownership/Shared Equity product range, and follow the same policy as for standard remortgages e.g. Maximum LTV of 85% (of applicant's share) if additional borrowing is required.
Additional lending for the purpose of home improvements is permitted at the time of application. The applicant will need to provide confirmation from the Housing Association/Local Authority of their agreement to the additional borrowing and that it will be covered by the Mortgagee Protection Clause/Section 442 Guarantee or NICOHA side agreement.