What is...

Shared Equity

Shared Equity mortgages are part of a scheme aimed at first time homeowners, where the borrower takes out an equity loan to contribute towards the deposit, in addition to the regular mortgage loan.

This differs from Shared Ownership in that the borrower owns the whole property. As such, no rent is paid to the third party for their share.

Shared Equity mortgages are associated with the Government’s Help to Buy scheme. This is open to key workers, other selected buyers and first-time buyers looking to buy a house valued below £600,000.

Will a mortgage under the Shared Equity scheme appear on my Credit Report?

Mortgages should still be reported to Credit Reference Agencies as usual, which means you can find your mortgage history on your Credit Report. You’ll be able to see your mortgage lender, outstanding balance, account status, and more.

Using checkmyfile, you can easily find your data from Equifax, Experian, TransUnion, and Crediva on the same, easy-to-use platform.

You can try your Multi Agency Credit Report free for 30 days, then just £14.99 per month. Cancel easily online anytime.

How do Shared Equity mortgages work?

Under the Help to Buy shared equity scheme you provide a 5% deposit and buy 75% of a property, taking a mortgage from a select number of lenders. The remaining 20% is provided via equity loans from the mortgage lender and the Government. After 5 years, you’ll be charged interest at 1.75% of the value of the loan, increasing in-line with inflation plus an additional 1%. Both equity loans are fully repayable when you sell the property.

Are Shared Equity mortgages easier to get?

In a sense it can be easier to get a Shared Equity mortgage, because the deposit is typically lower than with other types of mortgage. They are intended to help first time buyers primarily, but there are other circumstances where you might benefit more from a Shared Ownership mortgage. In short, they can be easier or harder to get, depending on your circumstances.

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