How Is Affordability Calculated When Buying a Shared Ownership Home
Affordability for a shared ownership home is calculated on the total monthly cost, not just the mortgage. That total has three parts: the mortgage payment on your share, the rent on the share you do not own, and the service charge. Providers check that the whole package fits your income after your regular outgoings.
The mortgage part is assessed like any mortgage, with a stress test and an income multiple. The rent part is usually around 2.75% of the unowned share's value per year. On a £300,000 home at a 50% share, the rent is about £344 a month on the other £150,000, and that sits on top of a mortgage payment of roughly £725 a month on a £135,000 loan.
There are also caps. Shared ownership is aimed at households below certain income thresholds, and providers set a minimum income as well as a maximum. If the total cost is more than roughly 40% of your monthly income, most providers will want to see a strong case for why it is still affordable.
- Total cost = mortgage + rent on unowned share + service charge.
- Rent is usually around 2.75% of the unowned share per year.
- Providers check the total against income, with minimum and maximum income rules.
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