Shared Ownership Mortgages: Comprehensive Guide 2025

Shared ownership is one of the most effective routes onto the property ladder for buyers who cannot afford to purchase a home outright on the open market. By allowing you to buy a share of a property — typically between 25% and 75% — and pay rent on the remainder, shared ownership makes homeownership accessible at a fraction of the usual cost.

In this complete guide, we explain how shared ownership works in detail, who is eligible, how the mortgage process differs from a standard purchase, the costs involved, the process of increasing your share over time (known as staircasing), and the key things to consider before committing.

How does shared ownership work?

Shared ownership is a government-backed scheme administered through housing associations (also known as registered providers). Here is the basic structure:

1. You buy a share of a property — typically between 25% and 75% of its full market value
2. You take out a mortgage on the share you are buying
3. You pay rent to the housing association on the share you do not own
4. Over time, you can buy additional shares (staircase) until you own the property outright

The combination of mortgage payments and rent is usually significantly lower than either buying the property outright or renting a comparable home on the private market. This makes shared ownership particularly attractive for first-time buyers, key workers, and anyone priced out of their local housing market.

Example:

• Property market value: £250,000
• Share purchased: 40% (£100,000)
• Mortgage: £100,000 (for your share)
• Deposit: £5,000 to £10,000 (5% to 10% of your share, not the full property value)
• Monthly rent to housing association: approximately £240 per month (2.75% of the housing association’s £150,000 share, divided by 12)

Compare this to buying the full property at £250,000, where you would need a deposit of £12,500 to £50,000 and a mortgage of £200,000 to £237,500. For more on standard purchases, see our first-time buyer mortgages page.

Who is eligible for shared ownership?

Shared ownership is aimed at people who want to own their home but cannot afford to buy on the open market. The eligibility criteria are:

Income requirements:

• Your household income must be £80,000 or less (or £90,000 or less in London)
• You must be unable to afford to buy a suitable home on the open market in your area

Buyer requirements:

• You must be a first-time buyer, a previous homeowner who can no longer afford to buy, or an existing shared owner looking to move
• You must not currently own another property at the time of purchase (if you are a previous homeowner, you must have sold your property before completing on the shared ownership purchase)
• You must be at least 18 years old

Affordability:

• You must be able to demonstrate that you can afford the mortgage payments, rent, service charges, and general living costs combined
• Lenders will assess your affordability based on your income, outgoings, and credit history
• Use our affordability calculator to get an initial sense of what you could afford

Priority groups:

Local councils and housing associations may give priority to:

• Existing social housing tenants
• People who live or work in the local area
• Key workers (in some areas)
• Members of the armed forces or veterans

How much deposit do you need for shared ownership?

One of the biggest advantages of shared ownership is the dramatically reduced deposit requirement. You only need a deposit based on the share you are purchasing, not the full property value.

Most shared ownership lenders require a deposit of 5% to 10% of the share you are buying.

Example:

Property value	Share purchased	Share value	5% deposit	10% deposit
£200,000	25%	£50,000	£2,500	£5,000
£250,000	40%	£100,000	£5,000	£10,000
£300,000	50%	£150,000	£7,500	£15,000

This makes shared ownership one of the most accessible routes to homeownership for people with limited savings. You can further boost your deposit by saving into a Lifetime ISA (which provides a 25% government bonus on contributions up to £4,000 per year) or by receiving a gifted deposit from a family member. Our ultimate first-time buyer guide covers all deposit-building strategies.

For more on building your deposit, read our full guide to mortgage deposits.

The shared ownership mortgage process

Getting a mortgage for a shared ownership purchase is similar to a standard mortgage application, but there are some important differences.

Specialist lenders:

Not all mortgage lenders offer shared ownership products. You need a lender that specifically underwrites shared ownership mortgages, as the arrangement involves a housing association lease and rent payments alongside the mortgage. At Option Finance, we have access to the full range of shared ownership mortgage lenders and can identify the best deals for your circumstances.

Affordability assessment:

The lender will assess your ability to afford:

• The monthly mortgage payments on your share
• The monthly rent to the housing association
• Any service charges or ground rent applicable to the property
• Your general living costs and existing financial commitments

The total of all these payments must be comfortably affordable based on your income. Lenders typically apply stress tests to ensure you could still afford the payments if interest rates rose.

Mortgage products available:

Shared ownership mortgages are available as:

• Fixed-rate — the most popular choice, providing payment certainty for two, three, or five years
• Variable or tracker rates — potentially cheaper initially but with the risk of payments increasing
• Repayment mortgages — your monthly payments cover both interest and capital, so you gradually pay off the mortgage

Interest-only mortgages are generally not available for shared ownership purchases.

Use our mortgage calculator to estimate your monthly mortgage payments, and our repayment calculator to see how different terms affect your costs.

Getting an agreement in principle:

Before you start searching for a shared ownership property, it is advisable to get a mortgage agreement in principle. This tells you how much a lender is willing to offer and what share of a property you could afford. Housing associations typically require evidence of mortgage affordability before accepting your application.

Understanding the costs of shared ownership

Beyond the mortgage payment, there are several ongoing costs associated with shared ownership that you need to budget for.

Rent:

The rent you pay to the housing association on their share is typically set at 2.75% per year of the value of the housing association’s share, divided into monthly payments. For example, if the housing association’s share is worth £150,000, your annual rent would be approximately £4,125, or about £344 per month.

Rent increases are usually capped at RPI inflation plus 0.5% per year (or CPI plus 1% for properties built under the 2021 model lease). Over time, these increases can be significant, so it is important to factor potential rent rises into your long-term affordability planning.

Service charges and ground rent:

If you are purchasing a flat or a property on a managed estate, you will likely be liable for service charges. These cover the cost of maintaining communal areas, building insurance, ground maintenance, and other shared costs. Service charges can range from a few hundred to several thousand pounds per year, depending on the property and its facilities.

Ground rent may also be payable on leasehold properties, though recent legislation has capped ground rent on new leases to a peppercorn (effectively zero) for properties sold on new leases granted after 30 June 2022.

Stamp duty:

As a first-time buyer, you benefit from stamp duty relief:

• 0% on the first £300,000
• 5% on the portion between £300,000 and £500,000

For shared ownership, you have the option to pay stamp duty on just the share you are purchasing (market value election) or on the full market value of the property. In most cases, paying on the share is cheaper initially, but paying on the full value can be more cost-effective if you plan to staircase to full ownership. Your solicitor can advise on the best approach. Use our stamp duty calculator to model different scenarios. For comparison, see how this compares to Right to Buy purchases.

Solicitor fees, surveys, and other purchase costs:

As with any property purchase, you will need to pay solicitor or conveyancer fees (typically £1,000 to £2,000), valuation fees, and any survey costs. Budget for these on top of your deposit.

Staircasing: increasing your share over time

Staircasing is the process of buying additional shares in your property, gradually increasing your ownership stake. This is one of the most appealing aspects of shared ownership — you start with what you can afford and work towards full ownership over time.

How staircasing works:

• You apply to your housing association to purchase additional shares
• The housing association arranges an independent RICS valuation of the property (you pay for this)
• The additional share is purchased at the current market value, not the original price — so if the property has increased in value, you will pay more per percentage point than you did originally
• You can fund the staircasing purchase through savings, a remortgage (borrowing more against the increased share), or a combination of both
• Once you own 100% of the property, you no longer pay rent to the housing association

2021 model lease improvements:

For shared ownership properties built under the 2021 model lease, the government introduced the ability to staircase in 1% increments (up to a total of 15% of the property value) during the first 15 years. This makes it much more affordable to increase your share gradually.

For properties under the older lease model, the minimum staircasing increment is typically 10%, which requires a larger financial commitment each time.

Costs of staircasing:

Each staircasing transaction involves costs, including:

• RICS valuation fee
• Solicitor fees
• Mortgage arrangement fees (if you are remortgaging to fund the purchase)
• Potential stamp duty implications (depending on the option you chose at initial purchase)

Is staircasing always worth it?

Staircasing reduces your rent payments (because the housing association owns less of the property) and increases your equity. However, if property values have risen significantly since your initial purchase, the cost of additional shares may be high. You should also consider whether the money used for staircasing could achieve better returns elsewhere. Getting professional financial advice before staircasing is recommended. Our remortgage calculator can help you model the cost of borrowing to fund staircasing.

Selling a shared ownership property

If you decide to sell your shared ownership property, the process is slightly different from selling a standard property.

The housing association’s nomination period:

When you notify your housing association that you want to sell, they typically have a nomination period (usually 4 to 8 weeks) during which they will try to find another eligible shared ownership buyer for the property. During this time, you cannot sell on the open market.

If the housing association finds a buyer, the sale proceeds at the agreed price. If they do not find a buyer within the nomination period, you are free to sell on the open market to any buyer.

Selling at full ownership:

If you have staircased to 100% ownership, you can sell the property on the open market without any restriction from the housing association (subject to any covenants on the lease).

Selling at partial ownership:

If you are selling while still at partial ownership, the buyer must meet the shared ownership eligibility criteria and be approved by the housing association. This can limit your pool of potential buyers.

Advantages and disadvantages of shared ownership

Advantages:

• Much lower deposit than buying on the open market
• Lower mortgage amount, meaning lower monthly payments and less interest over the term
• A route to full ownership through staircasing
• More affordable than renting in many areas, when mortgage and rent are combined
• Government-backed with consumer protections, particularly under the 2021 model lease
• First-time buyer stamp duty relief applies to shared ownership purchases

Disadvantages:

• Rent payments on the housing association’s share can increase over time
• Service charges can be significant, particularly for flats
• Staircasing costs increase if property values rise
• Selling can be more complex due to the nomination period and eligibility requirements
• Leasehold restrictions may limit what alterations you can make to the property
• Negative equity risk — if property values fall, you could owe more than your share is worth

Shared ownership with adverse credit

If you have had credit difficulties in the past, shared ownership may still be an option. Some lenders who offer shared ownership mortgages also accept applicants with adverse credit, though the terms may be less favourable and you may need a larger deposit on your share.

At Option Finance, we work with a wide range of lenders, including specialists who consider applications from buyers with missed payments, defaults, or CCJs. We can assess your situation and find the best available options.

Get expert shared ownership mortgage advice

Shared ownership is a powerful route to homeownership, but navigating the eligibility criteria, mortgage options, and ongoing costs requires expert guidance. At Option Finance, our advisers have extensive experience helping shared ownership buyers find the right mortgage and understand all the costs involved.

Whether you are buying your first shared ownership home, staircasing to increase your share, remortgaging your shared ownership mortgage, or considering moving home from an existing shared ownership property, we can help.

Apply now to speak with one of our shared ownership mortgage specialists and start your journey to homeownership.