Understanding Shared Ownership costs

Buying a home is a big step, and it's natural to want to understand the costs involved.

Shared Ownership can make home ownership more affordable because you buy a share of a home and pay a reduced rent on the part you don't own. This usually means you'll need a smaller deposit and mortgage than if you were buying on the open market.

Before you buy

When buying a Shared Ownership home, there are a few costs to budget for during the buying process.

Reservation fee - £500

When you reserve your home, you'll pay a £500 reservation fee. Don't worry, this is deducted from your final purchase price when your sale completes.

Deposit

You'll need a deposit for the share of the home you're buying.

Because you're only buying a share of the property's value, your deposit is often lower than if you were buying a home outright.

How it all adds up

Shared Ownership is designed to make buying a home feel more manageable. Instead of paying for the full cost of the home upfront, your monthly payments are split between a mortgage for the share you buy and rent on the share owned by Gentoo.

Here’s a simple example to help show what your monthly costs could look like.

• If a home has a full market value of £200,000 and you buy a 25% share, the share you are buying would be worth £50,000.
•  With a 5% deposit, you would need around £2,500.
• Your mortgage would be around £47,500. Based on a 5% interest rate over 25 years, your monthly mortgage payment could be around £238.
• You would also pay rent on the remaining 75% of the home, which is the share owned by Gentoo. In this example, this could be around £344 a month.

Your estimated monthly cost in this example:

• Mortgage: £238
• Rent: £344
• Total: £582 per month

This does not include service charges, household bills or other costs linked to buying and running your home.

These figures are just a guide, and the amount you pay will depend on the home you choose, your mortgage offer and your own circumstances. Before you decide if Shared Ownership is right for you, we recommend speaking to an independent financial advisor so you feel confident about your options.

Financial advice

Typically around £500 (if applicable)

You'll need an affordability assessment to make sure Shared Ownership is the right option for you. Some Independent Financial Advisors may charge a fee for this service and for arranging your mortgage. We have contact details of several independent financial advisors and solicitors who are both experienced in shared ownership sales, as well as our developments. If you need help finding one, just let us know.

Mortgage fees

Your lender may charge:

• A valuation fee to confirm the value of the home.
• A mortgage arrangement fee to set up your mortgage.

These costs vary depending on the lender you choose.

Legal fees

You'll need a solicitor or conveyancer to handle the legal work involved in buying your home.

Solicitor fees vary, but you'll also pay a documentation fee of £90 - £120 for the preparation of your Shared Ownership lease.

Stamp Duty

Depending on your circumstances, you may need to pay Stamp Duty.

As a Shared Ownership buyer, you can choose to:

• Pay Stamp Duty on the full market value when you buy your home.
• Pay in stages as you buy more shares in the future (if your ownership goes above 80%).

For the latest information, visit the https://www.gov.uk/stamp-duty-land-tax.

When you move in

When your purchase completes, you'll usually need to pay rent and any service charges in advance.

Rent in advance

This covers:

• Rent from your completion date until the end of that month.
• The following month's rent in advance.

Service charge in advance

If your home has a service charge, you'll usually pay:

• The service charge from your completion date until the end of that month.
• The following month's service charge in advance.

After you've moved in

Once you're settled into your new home, you'll have some regular costs to pay, including:

• Your mortgage
• Rent on the share of the home owned by Gentoo
• Any service charges
• Council Tax
• Home insurance
• Water and energy bills
• Looking after and maintaining your home

Buying more shares

One of the benefits of Shared Ownership is that you can buy more shares in your home in the future.

As your ownership increases, the amount of rent you pay decreases. If you eventually buy 100% of your home, you'll own it outright and won't pay any rent.

We're here to help

We'll explain all the costs for your chosen home before you commit to buying, so you know exactly what to expect.

If you're interested in Shared Ownership, our team can guide you through the process and help you understand the costs involved every step of the way.