Shared ownership mortgage: how it works and what it costs

What is a shared ownership mortgage?

A shared ownership mortgage is an ordinary repayment mortgage that covers the share of a home you are buying rather than the whole home, so on a 40% share of a £300,000 property you borrow against £120,000, not £300,000 (GOV.UK). You pay the lender each month for your share and pay the landlord rent for theirs.

The mechanics are the same as any mortgage: a deposit, an affordability check, a fixed or variable rate, a term of 25 years or more, and a charge over your lease so the lender can repossess if you stop paying. Three things are different. The deposit is worked out on the share, the lender counts your rent and service charge as bills, and only some lenders offer the product at all.

Every shared ownership home is leasehold, and the lender lends against your lease. The lease contains a mortgagee protection clause, which lets the lender recover its loss from the landlord’s share if it has to take possession after a default (Homes England guidance). That clause is the reason banks are willing to lend on part of a home, and it is why the landlord must consent to your mortgage before completion.

How much deposit do you need?

You need a deposit of between 5% and 10% of the share you are buying, paid when you exchange contracts (GOV.UK). It is a percentage of the share, not of the full value, which is what makes the scheme reachable.

A 5% deposit means the mortgage is 95% of your share, which lenders treat as high loan-to-value and price accordingly. If you can find 10%, the mortgage is 90% of the share and the rate is usually better. You also need money for a reservation fee of up to £500, your solicitor’s fees, any stamp duty and moving costs (GOV.UK).

What are shared ownership mortgage rates in September 2026?

Shared ownership mortgage rates are set product by product by each lender, so there is no single published figure, but the mainstream first-time buyer market gives you a yardstick. On 26 September 2026 the best two-year fixed rates from lenders operating across England were 4.92% at 75% loan-to-value, 5.06% at 85%, 5.13% at 90% and 5.57% at 95%; the best five-year fixes ran from 4.97% at 75% to 5.54% at 95% (HomeOwners Alliance rate table). The table’s very cheapest rates (4.69% two-year) came from Danske Bank, which only lends on homes in Northern Ireland, so they are left out here.

Two warnings. First, these are ordinary mortgages, not shared ownership ones; a shared ownership quote at the same loan-to-value may be higher because fewer lenders compete. Second, rates move weekly. The point of the table is to give you a benchmark: if a quote is far above the mainstream figure for your loan-to-value, ask why. This site uses 5.55% as its working rate for a 95% mortgage on a share and 5.15% at 90%, and you can change either in the shared ownership calculator.

How much can you borrow?

Lenders limit the number of mortgages they grant at 4.5 times income or more, because a Bank of England rule keeps such loans to 15% of new lending across the market as a whole; since July 2025 an individual lender may go above 15% as long as the market stays within it (Bank of England). So 4.5 times your household income is still a fair rough ceiling, and most people borrow less.

For shared ownership the lender then deducts your rent and service charge as committed outgoings before deciding what monthly payment you can afford. A £413 rent and a £150 service charge shrink the mortgage you can get by more than you might expect. Before any of this, the landlord checks you can afford the home, and GOV.UK says the landlord will pass you to a mortgage adviser for that assessment (GOV.UK). You cannot skip that step by arranging your own mortgage first.

Worked example: a 40% share of a £300,000 home

Here is the mortgage part of the sums, with rent at 2.75% a year of the landlord’s share, which GOV.UK says most landlords charge under a 3% cap on new-build homes (GOV.UK), and a £150 monthly service charge.

The mortgage on £114,000 is about 2.4 times a £48,000 household income, well inside the usual limit, but the lender will test the whole £1,266 against your income and outgoings, not just the £703. The extra £6,000 of deposit buys a cheaper rate band and saves about £63 a month, so it pays for itself in about eight years even before you count the smaller loan.

How do you find a lender that offers shared ownership mortgages?

A number of high street banks and building societies offer shared ownership mortgages, but many lenders do not, and the House of Commons Library lists mortgage availability among the barriers to the scheme (House of Commons Library). Lenders also differ on which leases they accept, especially older leases and homes in designated protected areas where you can never own more than 80%.

This site does not recommend lenders. What you can do is ask the landlord which lenders have recently lent on its homes, ask any broker for the full list of lenders it can access, and compare at least three quotes at the same loan-to-value and term. Homes England publishes guidance for lenders on the standard lease terms, which is why most lenders that take shared ownership accept most modern leases (Homes England guidance).

Do you need a shared ownership mortgage broker?

You do not need one, but the case for using a broker is stronger here than for a normal purchase. A broker who handles shared ownership every week knows which lenders take it, which leases they reject, how each one treats the rent in its affordability model and how long each takes, and a rejected application costs you weeks against the landlord’s deadlines. A broker who has never done one can cost you the home.

Brokers are paid in different ways. Some charge you a fee, some are paid a commission by the lender, and some take both. Ask before you start, get the answer in writing and ask whether the broker is limited to a panel of lenders or covers the whole market. This is a description of how the market works, not a recommendation of any firm.

What happens when you staircase or remortgage?

Buying more shares, known as staircasing, usually means borrowing more. You need a valuation by a surveyor registered with the Royal Institution of Chartered Surveyors, and you must buy within 3 months of the valuation date or the home needs valuing again (GOV.UK). Your existing lender may offer a further advance, or you may remortgage to a new lender at the same time. Either way you go through affordability checks again, with your lower rent counted in your favour. The staircasing page has a worked example.

When a fixed deal ends you can remortgage in the normal way, but only to a lender that offers shared ownership mortgages, and the landlord must consent to the new charge over the lease (Homes England guidance). Build that into your timetable so you do not drift onto a standard variable rate.

How does this compare with a Your First Home mortgage?

Under Your First Home, the equity loan scheme announced on 26 September 2026, you put down 2.5% of the full price of a new-build home in England, the government lends 20%, and your mortgage covers the remaining 77.5% (GOV.UK). On the £300,000 home that is a £232,500 mortgage costing about £1,359 a month at 5%, with no rent, against a £114,000 mortgage (about £703 a month at 5.55%) plus £413 rent under shared ownership. The Your First Home mortgage is bigger but sits at a low loan-to-value, so it should attract the cheaper end of the rate table; the shared ownership mortgage is smaller but comes with rent that rises every year. The rules for Your First Home are due at the Budget on 28 October 2026, and the Your First Home vs Shared Ownership page compares the two in full.

What to do next

• Decide whether you can reach a 10% deposit on your share; the rate difference between 90% and 95% loan-to-value is worth checking on every quote.
• Run the full monthly cost, including rent and service charge, in the shared ownership calculator before you speak to a lender.
• Ask the landlord which lenders have lent on its homes recently, then compare at least three quotes at the same loan-to-value.
• Read the stamp duty page before exchange, because the choice you make there is hard to change later.