Mortgage Guide

Shared Equity Mortgages

Shared equity mortgages are associated with the UK's Open Market HomeBuy Scheme.

Interestingly, despite the terminology the equity is not shared and the (typically first time buyer) owner does not initially share the equity with any other body but does obtain financing from various quarters! When he comes to sell however, he does have to forfeit some of his equity that he has in the property.

Under the New Build HomeBuy scheme, the structuring of the finance is quite fractured. The bulk of the financing is from a shared equity mortgage from the open market.  To find out which shared equity mortgage is right for you would would need to seek mortgage advice.

The two new products, part of the government's Open Market HomeBuy initiative, offer key workers and other first time buyers access to an equity loan of up to 50% of the property's value.  Eligible applicants have a choice between finding their own mortgage or picking a competitive deal through The Co-Operative Bank.

Ownhome is provided by a partnership between Places for People and The Co-operative Bank.  Ownhome gives people the chance to take up to 40% of the value of the property in an equity loan from Places for People.  They would pay nothing at all for the first five years on the equity loan.   After these five years, a low rate would be paid on the sum – starting at a fixed rate of just 1.75% interest per year for the next five years,  and then increasing to 3.75% interest per year from year eleven.      The remainder would be funded through a conventional mortgage with The Co-operative Bank.  There will be no premium or extra charges on the mortgage, and customers can choose from a range of competitive deals including fixed rate and tracker options.   Customers can apply for Ownhome through their local HomeBuy Agent, or directly on the Ownhome telephone line 0845 607 0110.

MyChoice HomeBuy enables applicants to apply for a mortgage with any lender they choose.  The scheme would provide them with up to 50% of the value of the property as an equity loan.  The remainder would be funded through a conventional mortgage with a Financial Services Authority regulated lender.   They would pay a low rate of 1.75% per annum on the equity loan funded by one of eight housing associations who are acting as equity loan providers*.  The rate they pay on the standard mortgage would depend on the deal selected through the mortgage providers.   

With both products, no deposit is required, but is allowed.   When the property is sold, the equity loan provider will be entitled to a share of any increase in the value of the property.

Whilst investigating your eligibility for Open Market HomeBuy (See our Open Market HomeBuy Guide) you will still need to take shared equity mortgage advice. For those aspiring first time buyers who do not qualify under HomeBuy, there are private options but they are not fully established. 

Contact your HomeBuy agent.

Take shared equity mortgage advice

ACTION: Request no-commitment, independent,  first time buyer mortgage advice

Features, advantages and disavantages of specific first time buyer mortgages:

100% Mortgages l Cashback Mortgages l High LTV Mortgages l Graduate Mortgages l Professional Mortgages l Mortgages with Parents l Guarantor Mortgages l Family Offset Mortgages l Mortgages with Friends or Family l Mortgages at University l Rent a Room Mortgages l Affordable Mortgages l Interest only Mortgages l Part Repayment Part Interest Mortgages l Interest-free Start Mortgages l Shared Ownership Mortgages l Poor, Adverse or Poor Credit Mortgages l Key Worker Mortgages l Shared Equity Mortgages l 30, 35, 40 year term mortgages

Other mortgage guides, advice and useful pages:

Mortgage Comparison - First Time Buyer Mortgages - About First Time Buyer Mortgage Advice - First Time Buyer Mortgage Brokers - Buy to Let Mortgages for First Time Buyers - Remortgages for First Time Buyers - Shared Ownership Mortgages - Help with Mortgages for First Time Buyers - Mortgages for Parents of First Time Buyers - Shared Appreciation Mortgages - Shared Equity Mortgages  -Joint Mortgages - Financial Advice for First Time Buyers - Overseas Mortgages for First Time Buyers - Request First Time Buyer Mortgage Advice - Find your First Property - New-Build Gifted Deposit Deals - Best First Mortgages Comparison Table

Useful websites:

www.cml.org.uk – council of mortgage lenders.