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Shared Ownership Mortgages

If you are finding it hard to find a suitable new home then a Shared Ownership mortgage could be the way forward. Shared ownership is a part buy, part rent solution that lets you buy a share of a property using a combination of bank loan (mortgage) and personal deposit, and pay rent to a local Housing Association on the rest.

Summary

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Shared Ownership Mortgage Rates

If you are finding it hard to find a suitable new home then a Shared Ownership Mortgage could be the way forward. Shared Ownership is a part buy, part rent solution that lets you buy a share of a property using a combination of bank loan (mortgage) and personal deposit, and pay rent to a local Housing Association on the rest.

We have introduced an £850 Cash back incentive for all Shared Ownership Mortgage completions from customers borrowing £50,000 or more *

*Cash back amount is paid within 60 days of the date that the mortgage completes with Reliance Bank Ltd. Cash back does not apply to cases where the borrowing amount is less than the £50,000 qualifying loan amount.

 

How it works

  • Buy between 25% and 75% of a property from a Housing Association
  • On the part you’re buying, borrow up to 95% of the share that you are looking to own with a Shared Ownership Mortgage
  • Borrow between £50,000 and £500,000
  • 2 year and 5 year fixed rates available
  • UK Customer Experience Team

Please refer to the individual product rate guides for further details of terms and conditions

Click on the Mortgage documents button below and select Mortgages to see our current interest rates:

Mortgage documents

Are you eligible?

To apply for a shared ownership mortgage you must be a first time buyer or have owned a property in the past but not own one now. You can also apply if you already have a shared ownership mortgage and you want to move home.

As these mortgages are designed to help people on lower incomes, your combined household income must be:

-less that £80,000 if you live outside London
-less than £90,000 if you’re living in London

Please note our level of service is ‘execution only’ if you apply directly with the Bank, which means we can’t advise you on which of our mortgage products is best suited to you.

If you’re unsure as to which mortgage is best for you then you may wish to seek independent financial advice before you call.

If the independent financial adviser decides to place your application with Reliance Bank, you will be provided with “Advice and Recommendation” level of service through their service. There could be a fee.

Reliance Bank Limited are a mortgage lender and offer mortgages for properties in England and Wales.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Apply for mortgage

 

Shared ownership example

based on purchase price of 250,000

  • customer buys 60% share (156,000)
    paid for with 90% mortgage (140,400)
    and 10% deposit (15,600)
  • Housing Association keeps 40% share (94,000)
    Customer pays rent on this

‘Staircasing’ – a step closer to owning your home outright

After a period of time you may have the option of buying a further share of your home. This is known as ‘staircasing’.

Staircasing lets you gradually build up the amount that you own of your shared ownership home, usually by taking out a new mortgage on the extra share / usually with a combination of a new mortgage and personal funds. For example, if you start off buying 25% of your home and renting the other 75%, you could later buy another 25% share, meaning you would own 50%. In some cases, depending on the terms of the lease with the housing association, you can continue to buy shares until you own 100% of your property.

When you staircase, your mortgage payments go up, but your rent payments go down. And you’ll be a step closer to owning your own home outright.

Staircasing FAQ

Apply for a Shared Ownership Mortgage

The buying process

Buying through the shared ownership scheme is a little different from buying on the open market. That’s because the properties available have been specifically built by Housing Associations for shared ownership and can only be bought via a local Help to Buy agent.

Here’s a brief rundown of what you can expect between deciding you want to become a homeowner and making that dream a reality.

Choosing a shared ownership property

The scheme operates slightly differently in each part of the UK, so make sure you choose an agent in the area you want to buy and live.

England – outside London

England – in London

Northern Ireland

Scotland

Wales

You do this through your local Help to Buy agent. Among other things they will assess if you’re eligible for the scheme, based on your personal circumstances, credit history and financial situation.
Once accepted onto the scheme, you can start looking for shared ownership properties via your Help to Buy agent and listings on dedicated websites.

When you’ve found a property you’d like to buy, you’ll need to put down a reservation fee (typically around £200) with the Housing Association. At this point they will ask an independent financial adviser to carry out a full financial assessment to work out what percentage of the property you can afford to buy and how much rent you will need to pay.

You will need a special shared ownership mortgage to help pay for your share of the property. A financial adviser can help with this, or you can choose a mortgage provider yourself. Look at the rates available and the payment terms (for example how long it will take to pay back the mortgage). You may also consider things like the lender’s reputation, ethos and customer service.Let’s assume that you choose a Reliance Bank mortgage. What happens next?

Setting up your shared ownership mortgage

Call us to let us know you’re interested in taking out a Shared Ownership Mortgage. Our friendly mortgage team will discuss the mortgage features and next steps with you. Reliance Bank will provide information only so that you can make a decision based on your individual needs and circumstances. We do not provide advice on mortgages and are only able to discuss the mortgage products offered by Reliance Bank and not the whole of the mortgage market, so if you apply to us directly our level of service is execution-only. If you decided to apply to us under the Direct Channel, the level of service we provide is “Execution Only”. If you sought advice from a financial adviser and they looked to place your application with ourselves, this would be “Advice & Recommendation” Level of Service. 

Once we have completed some initial checks to confirm this mortgage is suitable for you, we’ll send you a mortgage Key Facts Illustration (KFI) / European Standard Information Sheet (ESIS) – which is otherwise known as a illustration which details the costs of the mortgage product you have chosen.

The Mortgage team will send you a mortgage application form to complete, sign and return to us. Once we have conducted our affordability assessment and we are happy to support your application, the mortgage team will then send you an Agreement in Principle.

This Agreement in Principle letter provides formal confirmation that the Bank is happy to provide you a mortgage. These letters are valid for 4 months from the date of issue and is subject to the following:

  • Checking that the information you have supplied to us is correct – including proof of identity, address, income, affordability and source of deposit.
  • A satisfactory valuation or assessment of the property to ensure it’s suitable to be mortgaged.

When you’re happy with the KFI Illustration (KFI) and Agreement in Principle, we can proceed to full mortgage application

Before we can provide a mortgage, we need a standard mortgage valuation on your property. As soon as we’ve received your acceptance to proceed with your mortgage application, we will arrange the valuation. Please see the Valuation fees doc on Mortgage Support page.

Once we have had a satisfactory valuation of the property, we will conduct a final review to ensure that all the requirements that were outlined in the agreement in principle have been met and satisfied. Once this review has been completed and we are happy, we will provide you with a formal mortgage offer, which is valid for a period of 6 months from the date of issue.
You appoint a solicitor/conveyancer to carry out the behind-the-scenes legal work that transfers a property from one owner to another. This includes checking the legal title and carrying out relevant but important searches on your property. They will also handle the transfer of funds from the bank to the Housing Association’s solicitors who will be handling the legal aspects of the transaction.
Once your solicitor/conveyancer has completed all the necessary legal work, you’ll be asked to sign a contract with the Housing Association and you will be asked to pay your deposit. The funds will be sent to the vendors solicitors (who will be working on behalf of the Housing Association) on day of completion and once confirmation of this has been received from the other parties solicitors, the estate agents will then allow the keys of the new property to be released. The home purchase is now a legally binding transaction.
Once the contracts are exchanged you can agree a completion date that suits you and the seller. This will be the date when the property becomes yours as this is when the bank will release the money to your appointed solicitor, who in turn will send the funds to the vendors solicitors (who will be working for the Housing Association). Once confirmation of the funds have reached the vendor’s solicitor, they will inform the estate agent that the keys to your new home can be released to you, so you can move in.
Luckily you don’t have to get involved in any of that. Instead, you can look forward to picking up the keys and picking out paint colours!

All done! This is the day you get the keys and can walk into your very own home.

Reliance Bank will send you a 1st payment letter, confirming the amount and date of your first monthly mortgage payment, together with confirmation of the date that the subsequent monthly mortgage payments will be collected from your nominated bank account that you have provided us with details of in your application.

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT.

 

Calculators

To help you work out how much you can borrow, we’ve provided a handy calculator below. Check how much you could borrow. It'll only take a few minutes.

How much can I borrow?

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*The amounts quoted are not a mortgage offer, they are only to give you an indication. You then have the option to make a full application if you choose to. When you complete the full application, we’ll do credit checks and ensure that you meet our lending criteria.

Important Information – All amounts quoted are for illustrative purposes only and all mortgage applications are subject to robust credit and affordability checks and the actual amount we will lend will depend on a credit assessment being made. If you have any ongoing credit commitments these will be taken into account and may affect the amount you will be able to borrow from us.

To obtain an accurate ‘How much I can borrow figure’ please apply for a formal Agreement in Principle by calling our Mortgage department on 020 7398 5421 / 020 7398 5422 / 020 7398 5423 where you can discuss your requirements with one of the bank’s mortgage underwriters. The underwriters operate on a phone rotation system.

This is not a formal quotation or a commitment to lend by Reliance Bank Ltd.

Our useful Mortgage Repayment Calculator can help you with your research into how much your monthly payments might be each month.

You can change the mortgage amount, term or interest rate in the Mortgage Repayment Calculator shown below to see the difference it makes and help you compare mortgage rates.

Mortgage Repayment Calculator

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Years
Approximate monthly payment £

You can use our mortgage calculator to see the impact of either extending or reducing the mortgage term however please take into consideration the following:

Extending your proposed mortgage term will make the monthly payments smaller. However, it will also increase the amount of interest you will have to pay back over the term of the mortgage.

Reducing your proposed mortgage term means that your payments are higher each month. But the overall amount of interest you will have to pay will be less.

Actual loan repayment amounts will be provided to you from the Reliance Bank Ltd Mortgage department in a Mortgage Illustration (known as a European Standard Information Sheet / ESIS). You can formally request an ESIS from the Reliance Bank Mortgage Team via email at mortgages@reliancebankltd.com or call us on 020 7398 5421 or 020 7398 5422 or 020 7398 5423. The underwriters operate on a phone rotation system.

The Mortgage term minimum and maximum limits within the Mortgage Repayment Calculator are based on our lending criteria which is a minimum mortgage term of 3 years and a maximum term for residential mortgages of 40 years. As a lender we only look at whole years for new mortgages and not years & months.


YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Our mortgages are subject to security and status and a first legal charge will be taken over the property.

Call us on 0207 398 5421, 0207 398 5422 or 0207 398 5423 or alternatively email mortgages@reliancebankltd.com to find out more.

Responsible Mortgage Lender

Reliance Bank is committed to being a responsible lender who acts in the best interests of its customers. Please read our commitment to Responsible Mortgage Lending which is attached in the list of Mortgage documents – please click on the “Mortgage documents” button below:

Mortgage documents

 

Rates and fees

The question on most home buyers’ lips is likely to be: “How much is this all going to cost?”

Buying a new home is without doubt an expensive business. It’s not just the cost of the property you have to factor in, but the fees and moving costs that come with it. Make sure you budget carefully so you have enough funds to pay for everything.

Click on the below for the following items:

Full list of all supporting Mortgage documents click on the button below:

Mortgage documents

Stick to your budget with a Fixed Rate mortgage

At Reliance Bank we offer two Fixed Rate Mortgages especially for First Time Buyers, either a 2 Year Fixed Rate or a 5 Year Fixed Rate. Whichever you choose, it means your interest rate – and therefore your monthly payment will remain the same for the period of the product.

At the end of your fixed rate period your mortgage will revert to a variable rate, although we will write to you before the end of your fixed rate period to let you know what other mortgages.

Our fixed rate products are fixed until a certain “end date” – which means in some instances, the Bank does not fix rates for 24 payments for 2 year fixed rates and 60 payments for 5 year fixed rate products.

Choose when to pay your mortgage arrangement fee

If your choice of your mortgage has an arrangement fee, you have a choice of ways to pay it. You can either pay it up front when you submit your full mortgage application. Or you can ask us to add the fee to the mortgage loan amount. This second option can help with the impact of initial set-up and moving costs, but please bear in mind that you will pay interest on the fee amount over the term of the mortgage loan.

Choose how you want to pay the stamp duty

When you first purchase a shared ownership property you can either make a one-off payment based on the total market value of the property or you can choose to pay stamp duty in stages. That is, you pay what is owed on the initial share you buy, then pay again if you buy more shares later (known as ‘staircasing’).

If you make a one-off payment then you won’t have to pay further stamp duty if you choose to staircase. This could be beneficial if you think the value of your property will rise substantially before you buy further shares.

Choose how you want to pay the stamp duty

When you first purchase a shared ownership property you can either make a one-off payment based on the total market value of the property or you can choose to pay stamp duty in stages. That is, you pay what is owed on the initial share you buy, then pay again if you buy more shares later (known as ‘staircasing’).

If you make a one-off payment then you won’t have to pay further stamp duty if you choose to staircase. This could be beneficial if you think the value of your property will rise substantially before you buy further shares.

 

General mortgage FAQs

The amount you can borrow depends on your individual circumstances. We base our lending decisions on household income, but we also need to take into account your outgoings, to make sure the mortgage is affordable for you. The last thing we want is to put you at risk by lending more than you can afford to repay.

We will also consider the size of the loan in relation to the value of your property (what we call the Loan to Value, or LTV). The lower the LTV, the higher the income multiple we will consider.

Here’s a guide to what we might be able to lend you, based on your LTV and household income:

LTVOne applicantTwo applicant
Up to 60%5 x sole income5 x joint income
60% to 75%4.75 x sole income4.50 x joint income
75% – 95%4.50 x sole income4 x joint income

Loan to Value’ is a financial term used to express the ratio of the loan (mortgage) to the value of the property that will be used as security for that loan.

For shared ownership, we work out the loan against the value of the share that is being owned by the customer then refer to example below

An example of a shared ownership mortgage
Full market value of the property £400,000
Customer is looking to own a 25% share = £100,000
Customer is looking to borrow 95% AGAINST the value of the share = £95,000
Deposit required = £5,000

No, you will need to employ the services of a solicitor or conveyancer to take care of the legal aspects of buying your home.

Yes. We lend up to 95% against the value of the share that you are looking to own of a property’s purchase price, so depending on the percentage being covered by the mortgage, you will have to pay the remaining amount – known as the deposit.

The money for your deposit may be your own, from an investment or inheritance, for example. Or the money may be coming from a relative – something that’s becoming increasingly common for First Time Buyers. Either way, when you apply for your mortgage, we may ask for proof of this deposit to ensure that you will be able to pay it when you come to exchange contracts.

If some or all of your deposit is coming from a friend or family member, there is a bit of extra paperwork to get through:

  • Reliance Bank will issue a Gifted Deposit Declaration to whoever is providing the gift for the deposit and ask them to seek independent legal advice
  • The Donor / Giftor will need to seek independent legal advice from a solicitor / Licensed conveyancer or notary about gifting a deposit
  • Your friend or relative will need to sign a Gift Waiver Declaration to confirm that independent legal advice has been given. Whoever provides the independent legal advice will normally charge the giftor for providing this, this charge will need to be met.
  • Reliance Bank ask that whoever has provided the independent legal advice, to send back the completed countersigned declaration from to the mortgage department

Please note that your solicitor may also wish to confirm these arrangements as part of the standard conveyancing procedure prior to exchange of contracts

It is a legal requirement by law, as well as a mandatory condition of all our mortgages that you must have adequate buildings insurance in place.
Shared Ownership mortgages are secured against Leasehold properties, the freeholder (management company / Housing Association) is responsible for ensuring that the property has valid buildings insurance in place at time of exchange of contracts. Your solicitor or conveyancer will ask for these details prior to exchanging contracts with the Housing Association’s solicitor and will check to ensure that there is adequate cover in place.

Contents insurance is not a legal requirement for our mortgages, but do think carefully about protecting the contents of your home against mishaps and events beyond your control, e.g. burglary, flood or fire. There is a wide variety of cover available from most insurance companies.

A Life Insurance policy could be used to repay your mortgage in the event of your death or you have a critical illness. However, please be aware that the amount may not be sufficient to cover the amount borrowed as this will depend on the sum assured.
Exemptions and maybe pre-existing medical conditions may mean that the amount borrowed cannot be paid (these will be outlined to you during the medical questionnaire & underwriting that the provider will undertake at the time you apply for your cover). However it maybe worth considering that a Life Insurance policy could ease the financial burden of mortgage repayments for your family at what would be a distressing time. It is not a condition of our mortgage that you have to have a policy in place, but if you feel you would like this extra protection, please speak to an independent financial advisor who will be able to provide a solution for your needs.

Income protection is not a requirement of our mortgages, so this is a decision for you. Income protection covers your monthly income should you become unemployed or sick. If you’re considering any insurance and protection scheme, you should always seek advice from a reputable insurance company or an independent financial advisor.

Staircasing FAQs

First you need to contact your Housing Association and give notice that you want to buy a further share of the property. A surveyor will then value the property, so you can agree with the Housing Association how much you will buy. Agreement reached, It’s time to apply for a staircasing mortgage. From there on, the mortgage process is very similar to that of any mortgage, including financial checks, a property valuation, conveyancing and the transfer of funds.

On top of the price you’ll pay for the additional share of the property, there are several other costs that you’ll need to consider.

Surveys – to assess the current value of the property

Legal fees – the cost of the solicitor or conveyancer to carry out the legal work, which you have to pay, not the housing association

Mortgage fees – depending on the terms of your mortgage i.e. product fees, Early Repayment Fees where appropriate and broker fees if appropiate

Stamp duty – see below

It depends what you did when you first bought the property. If you made a one-off stamp duty payment on the total market value of the property, then you won’t have to pay again when you staircase. If you only paid stamp duty on the share you bought, then you may need to pay stamp duty on each further share you buy, based on the market value of the property at that time.

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

This varies depending on the terms of your lease. In most cases you can staircase up to three times until you own 100% of your home. Bear in mind that you’ll pay admin fees every time you staircase, so it makes sense to buy as big a chunk as you can each time

 

Apply

Before applying for a shared ownership mortgage, you should already have been accepted on to the shared ownership scheme through a local Help to Buy agent.

Found a property? Let’s talk mortgages…

If you have found a property then you can either give us a call on 0207 398 5421, 0207 398 5422 or 0207 398 5423 and apply by phone although we will still require the completion of an application form that we will send to you.

Or you can email us on mortgages@reliancebankltd.com to get the ball rolling.

Please note our level of service is ‘execution only’ if you apply directly with the Bank, which means we will be unable to provide you with advice on which of our mortgage products is best suited to you. If you’re unsure as to which mortgage is best for you then you may wish to seek independent financial advice before you call.

If the independent financial adviser decides to place your application with Reliance Bank, you will be provided with “Advice and Recommendation” level of service through their service

 

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