If you bought your property using the shared ownership scheme, you might be wondering, can I get a secured loan on it? In this guide, we’ll explain how secured loans work with shared ownership properties, what you need to know, and how to find the right lender.
What is a shared ownership property?
A shared ownership property is exactly what it sounds like, you own part of the property, and a housing association owns the rest. You’ll pay rent on the portion you don’t own.
Because you only own a share of the property, you might be wondering whether it’s possible to get a loan secured against it. The short answer is, it’s possible, but the rules are a little different compared to a property that is not a part of this scheme.
Can I get a secured loan on a shared ownership property?
Yes, you can. There are lenders who will offer a secured loan on a shared ownership property. But it’s important to understand some key details about the process:
- The loan is usually secured against the portion of the property you own, not the entire property.
- If you default on repayments, the whole property could be at risk, so staying on top of payments is essential.
- Lenders may have stricter requirements, such as minimum ownership percentages and eligibility rules.
If you need funding for a specific purpose, a secured loan on a shared ownership property can work, but it needs to be arranged with a lender who understands and accepts this type of property.
Is the criteria different from a standard residential property?
Yes. Because you don’t own the full property, the criteria will be different from a normal residential property.
Not all lenders are happy to lend on shared ownership properties. This is why speaking with a broker can be really helpful, as they can guide you to the lenders who are willing to consider your property and help you understand which options are available.
Are there fewer options available?
Yes, there are fewer lenders offering loans on shared ownership properties. But that doesn’t mean there’s nothing available. There are still lenders who are happy to provide loans in these situations. It's just a case of finding the right lender to help you.
Things to consider before applying
Before taking out a secured loan on a shared ownership property, it’s worth keeping these points in mind:
- Know your ownership share: The larger your share, the easier it may be to secure a loan.
- Check lender policies: Not all lenders accept shared ownership properties.
- Affordability: Make sure you can comfortably keep up with repayments. Missing payments could put your property at risk.
- Purpose of the loan: Be clear about why you need it, whether it’s for home improvements, debt consolidation, or another purpose.
How to find the right solution
Finding the right secured loan for a shared ownership property isn’t always straightforward. Not all lenders will accept this type of property, and the criteria can vary depending on your ownership share, loan amount, and purpose.
This is where speaking with a broker can make a difference. A broker can guide you through the options, helping you understand:
- Which lenders are open to shared ownership properties: Some lenders specialise in this type of property and are more flexible than others.
- Where your case is most likely to be accepted: Brokers can match your situation with lenders who are most likely to approve your application.
Using a broker can be really helpful, but it’s worth remembering that it can come with additional costs, as many charge a fee for their guidance and support.
Summary
A secured loan on a shared ownership property is possible, but it works a bit differently from a standard residential property. You’ll need to secure it against your share of the property and meet specific lender requirements.
Speaking with a broker or advisor is usually a good way to understand your options and find a lender that can work with your property.
Loans are secured against property - Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
