Santander Shared Ownership Mortgage Guide
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What is the Shared Ownership Scheme?
The shared ownership scheme is an innovative route to homeownership, often described as “part buy, part rent.” This scheme is tailored to those looking to own their own home with a mortgage from shared ownership mortgage lenders but may lack the means necessary to purchase the whole property.
Definition and Fundamentals
The scheme enables the purchase of a home share (between 25% and 75%) and rent on the remaining part. It’s particularly beneficial for individuals who may find it challenging to secure a full mortgage or accumulate a substantial deposit.
Why Choose Santander?
Santander’s shared ownership mortgage is characterised by several key features.
- Competitive Rates: Santander’s interest rates are designed to keep monthly repayments affordable, facilitating the path to homeownership.
- Trusted Service: With a solid track record in the mortgage industry, Santander ensures a reliable and transparent mortgage process.
- Flexible Terms: Recognising the unique circumstances of each buyer, Santander offers adaptable terms to suit a variety of financial situations.
Santander’s Shared Ownership Mortgage Criteria
Santander provides a specialised shared ownership mortgage product, offering buyers the necessary flexibility. Below are some main aspects of Santander’s mortgage criteria for shared ownership:
- Santander’s mortgage is only available for properties where staircasing can lead to 100% ownership over time.
- The maximum Loan to Value (LTV) for a Santander Shared Ownership mortgage is 90%.
- With Santander, you can begin with a deposit as low as 5% for the share you are buying, making it an accessible option for many.
Santander Shared Ownership Mortgage Calculations
To understand your monthly repayments and financial scope with a Santander Shared Ownership Mortgage, it’s advisable to consult with an expert mortgage advisor. They can provide a detailed breakdown of your potential payments based on the share of the property you wish to purchase and the rent due on the remaining share.
Rent Payments in Shared Ownership
For example: Rent on the portion of the property you don’t own is typically set at an annual rate of 2.75% to 3%. For instance, owning 40% of a £200,000 home means you pay rent on the remaining £120,000. This could mean monthly payments of about £275 to £300, though the exact rate may vary.
Your Monthly Mortgage Payments
When considering a shared ownership mortgage with Santander, it’s essential to understand your monthly mortgage repayments for the share you own. If the mortgage interest rate is 5.5% and you’ve purchased a 40% share of a £200,000 property (which amounts to £80,000), your mortgage repayments would be calculated on this amount.
For example: If you take out a mortgage on the £80,000 share with a 5.5% interest rate, the monthly repayment would depend on the term of the mortgage. Assuming a 25-year mortgage term, the monthly repayment for the mortgage part would be approximately £490. This figure is a rough estimate and does not include other potential costs such as insurance, service charges, or ground rent. It’s always best to speak directly with an expert mortgage advisor to get a precise calculation tailored to your circumstance
Shared Ownership Eligibility and How to Apply
Understanding who can apply and the application process is crucial.
Who is Eligible?
Santander’s shared ownership mortgage is open to:
- First-time buyers looking to own a home
- Those who have owned in the past but can’t afford to buy now
- Current shared ownership property residents
- Council or housing association tenants
The Application Journey
The application process is streamlined with expert help from a shared ownership mortgage broker. Start by applying to a housing association’s shared ownership program. Then, reach out to our fee-free brokers for a financial assessment and to find the best Santander mortgage for you. One of our team of mortgage advisers will compare offers from over 90 mortgage lenders to ensure you get the best mortgage deal. Our personalised support simplifies the process, saving you time and securing the right mortgage. Get in touch to begin your homeownership journey.
Exploring Additional Mortgage Rate Options
Santander recognises that the journey to homeownership is unique for each individual, which is why they offer a variety of mortgage options to cater to diverse needs and circumstances.
Fixed-Rate Mortgage
For those who prioritise stability and predictability in their financial planning, Santander’s Fixed-Rate Mortgages provide a consistent monthly payment. This means no surprises for the duration of the fixed-rate term, allowing you to budget with confidence.
Tracker Rate Mortgage
If you’re looking to potentially benefit from lower interest rates, Santander’s Tracker Rate Mortgages could be appealing. These rates are variable and track above the Bank of England base rate, which means your monthly payments may increase or decrease in line with market changes.
Lifetime Tracker Mortgage
Santander Lifetime Tracker Mortgages offers long-term solutions where the interest rate follows the Bank of England base rate throughout your loan. This option offers flexibility as the rate may fluctuate over time; however, payments could change accordingly.
Santander offers four mortgage types with their own set of features and benefits; selecting the appropriate option depends on your financial circumstances, risk tolerance, and future plans. Our advisors can guide you through each option’s details so you make an informed decision that matches up with your home-buying goals.
Advantages and Considerations of Santander Shared Ownership
Navigating the world of mortgages can be complex, and shared ownership is no exception. It comes with its unique set of pros and cons that potential homeowners should carefully consider.
Advantages of Santander Shared Ownership
- Path to Full Ownership: Santander’s scheme is designed with the end goal in mind – complete homeownership. Over time, you can buy out the remaining shares of your home until you own 100%.
- Accessible Entry: With lower deposit requirements, Santander makes it easier for first-time buyers and those with limited savings to get onto the property ladder.
- Flexible Ownership: As your financial circumstances improve, you have the option to purchase additional shares of your home – a process known as staircasing – which can reduce your rental payments and increase your equity.
Considerations When Opting for Shared Ownership
- Resale Restrictions: When selling, it’s essential that you follow the rules set by your shared ownership scheme, including giving the housing association the first chance at buying it back from you.
- Ongoing Costs: In addition to your mortgage payment, additional ongoing costs such as rent on any portion of the property that isn’t owned by you and changing service charges/ground rent may become part of your responsibilities.
- Interest Rates: Santander offers competitive interest rates; however, shared ownership mortgages may come with slightly higher interest rates compared to conventional loans.
- Staircasing Limitations: Although staircasing is a significant benefit, it’s worth noting that there may be limitations and costs associated with buying additional shares, including valuation fees, legal costs, and potential stamp duty.
- Insurance and Maintenance: As a homeowner, you’ll need to factor in the cost of buildings insurance and potential repairs. Unlike renting, these financial responsibilities fall to you.
- Market Fluctuations: Like any property investment, your home’s value can go up or down. This means the value of your shares could change over time, impacting both your equity and resale value.
By weighing these pros and cons, you can make an informed decision about whether Santander’s Shared Ownership Mortgage aligns with your current needs and future goals. It’s always recommended to discuss your individual circumstances with a mortgage advisor to ensure you find the best path forward.
How YesCanDo Money Can Help
Choosing the right mortgage can be overwhelming, but with expert advice, it’s much simpler.
Expert Advice
YesCanDo Money provides free, expert mortgage advice built from over 30 years of experience in the mortgage market to help you understand shared ownership mortgages. A mortgage adviser will look at santander mortgages and compare them with shared ownership mortgages from all other mortgage lenders to find you the lowest interest rates and the best deal.
Smooth Application
YesCanDo Money ensures a smooth application process, assisting with document preparation and ensuring your mortgage application is strong and likely to be approved.
Continuous Support
Navigating your mortgage doesn’t end with an application approval. YesCanDo Money stays by your side, offering continuous support and mortgage advice throughout your entire mortgage journey. From understanding your repayment schedule to planning for staircasing or future moves, we’re here to ensure you feel confident and informed every step of the way.
Case Study: Emma and Alex's Homeownership Dream
FAQs on Shared Ownership Mortgages
Here are some quick answers to common questions about shared ownership mortgages with Santander.
Is it difficult to obtain a shared ownership mortgage?
Not necessarily. Eligibility will depend on income, credit history, and property details. Santander's transparent criteria help applicants gauge their chances.
What deposit is needed for shared ownership?
You'll need a deposit for the share you're buying, not the full property value. Santander allows for a minimal 5% deposit on your share.
Are rates higher for shared ownership mortgages?
They can be slightly higher, but Santander offers competitive rates that are often comparable to standard mortgages.
Do all banks offer shared ownership mortgages?
No, it's important to find a mortgage provider like Santander that specialises in these mortgage products.
How is shared ownership affordability calculated?
Affordability is based on your income, outgoings, and the property share you intend to buy. Santander provides resources and advisors to help you understand your budget.
Final Thoughts
Santander provides an abundance of mortgage products, so our role is to be your friendly guide in sorting through them all and finding what is best suited to you. Our commitment is ensuring we help you discover a mortgage solution tailored specifically for your story – always remembering to align your choices with long-term visions, while always knowing we are there supporting every step along the way!
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Grant Humphries (CeMAP)
Grant Humphries (CeMAP) is a proficient Mortgage & Protection Adviser at YesCanDo Money. With a career spanning since 2001, Grant has honed his expertise in understanding mortgage lenders' criteria, complex financial situations, and the nuances of the mortgage market. His deep knowledge enables him to provide tailored solutions, especially for professionals and those with unique financial profiles. At YesCanDo, Grant's commitment to excellence is evident. He takes pride in guiding clients through their mortgage journey, ensuring they feel confident and informed at every step. From first-time buyers to seasoned investors, Grant's analytical approach and dedication make him a trusted adviser in the financial landscape
