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Shared Ownership Mortgage Calculations

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Hi everyone,

(Hopefully) quick query regarding mortgages for purchasing a shared ownership property.

As an example - bank will generally lend 4.5x your annual salary.

Do the bank then make deductions from this amount, according to the rent and service charge?

Say the bank would lend £100k (round example)

If the rent and service charge for the shared ownership property comes to £300 per month for example ...
What would the maximum mortgage amount end up looking like?

Any info appreciated! Cannot seem to get a decent answer anywhere?!

Comments

  • MovingForwards
    MovingForwards Posts: 17,149 Forumite
    10,000 Posts Seventh Anniversary Name Dropper Photogenic
    Mortgage started 2020, aiming to clear 31/12/2029.
  • I am a shared ownership mortgage specialist and am on the panel of a couple of housing associations.

    Yes the rent and service charge will be counted as an outgoing so you won't be able to borrow as much under shared ownership as you would on the open market as you will have the rent and service charge as an outgoing.

    You will also need to pass the housing association affordability which is stricter than the banks affordability checks.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thanks both, that's really helpful :)

    Got to keep mortgage + rent + service charge under 45% of monthly pay, is that right?
  • Mortgage, rent, service charge, pension, student loan, loans, credit cards are all counted in the 45%
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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