Episode 5 of Bright Advice Mortgages by Design is now live! Mortgage & Protection Adviser Yasmin Aboujieb explains shared ownership options for first-time buyers. She covers family-assisted deposits, Lifetime ISAs, joint mortgages, and more. Halifax recently noted this is a great time for first-time buyers. Shared ownership schemes offer flexible paths to homeownership.

What is Shared Ownership?

Yasmin starts with shared ownership basics. Buyers purchase a share of a home (25-75%) and pay rent on the rest. It works well when full deposits seem out of reach. Housing associations own the unsold portion.

Family help fits naturally. Parents can fund the initial deposit or later staircasing (buying more shares). Monthly costs combine mortgage payments and rent. This often beats renting a similar property outright.

A 10% deposit on your share – say £20k on a £200k home – requires much less than full ownership upfront.

Advantages Over Traditional Buying

Family-assisted shared ownership has clear benefits. Smaller deposits start the process. Monthly costs stay lower than market rents. Staircasing builds full ownership gradually. Family funds remain flexible – used for your share without long-term ties.

A parental gift of £10-20k covers the initial share easily. No need for them to commit fully to property ownership.

Other Options for First-Time Buyers

Beyond shared ownership, several tools help. Lifetime ISAs allow £4k yearly savings with a 25% government bonus (£1k free) for homes under £450k. Help to Buy ISAs can roll into Lifetime ISAs.

Government equity loans once covered 20% on new builds with 5% deposits (now phasing out in many areas). Joint borrower sole proprietor arrangements use family income without them living in the property.

Structuring Family Help

When parents contribute partially, options exist. Gifts count as non-repayable deposits if documented. Interest-free family loans work too, with formal agreements for clarity.

Joint mortgages can use parents as guarantors. Their home stays safe unless defaults happen. Inheritance tax rules apply: gifts over £3k/person/year use annual exemptions. Potentially exempt transfers clear after 7 years.

Shared ownership handles these inputs cleanly. Providers focus on your affordability, not gift sources.

Downsides to Consider

Shared ownership has challenges. Rent on the unsold share typically rises with inflation (RPI +0.5-1%). Staircasing involves legal fees and valuations (£1-2k each time). Resale offers go first to the housing association.

Properties tend toward new builds. Fewer older home choices. Affordability mirrors full mortgages with stress tests at higher rates.

Key Advice for Overwhelmed Buyers

First-time buyers often feel lost. Yasmin suggests checking eligibility first: income, deposit size, and £450k property cap. A Mortgage in Principle shows borrowing power across lenders.

Research Lifetime ISA rules and shared ownership locations. Understand staircasing costs upfront. Family discussions clarify gift or loan structures early.

Why Now Feels Positive

Halifax highlights strong conditions for first-time buyers. House price growth slowed. More 95% LTV deals compete. Shared ownership stock increased. Rents reached record highs – owning any share saves long-term.

Government schemes push affordable housing. Timing matters before rules shift.

Shared Ownership Takeaways

• Ideal for 5-15% deposits on your share
• Family funds enable quick staircasing
• Lifetime ISAs boost savings by 25%
• Rent increases follow predictable patterns
• Full ownership remains achievable over time