How Do You Calculate Affordability for Shared Ownership
To calculate affordability for shared ownership, work through four steps. First, multiply the full market value by the share percentage to get the share price. Second, subtract your deposit to get the mortgage amount, and work out its monthly payment from the rate and term. Third, calculate the rent on the unowned share at the provider's rent rate. Fourth, add the mortgage, rent and service charge together.
Then compare that total with your monthly income. As a rough guide, housing costs up to around 35 to 40% of gross monthly income are usually considered manageable, but providers apply their own affordability models, including stress tests and checks on your other debts.
Worked example: £300,000 value, 50% share, £15,000 deposit, 5% over 30 years, 2.75% rent rate, £35,000 income. Share price £150,000, mortgage £135,000 at about £725 a month, rent about £344 a month, total about £1,069 before service charge, or about 36.6% of monthly income.
- Share price = full value × share percentage.
- Monthly cost = mortgage payment + rent on unowned share + service charge.
- Compare the total with monthly income; around 35 to 40% is a rough guide.
Try the free calculator to work out your own figures in seconds.