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Wondering how shared ownership works? A shared ownership calculator can help you understand your position and make the most of your situation.

Shared ownership is an attractive option for those who want to get on the property ladder but don't have the means to afford an entire mortgage. Shared ownership means that you own a portion of a property and rent the remainder from a developer or local housing authority. So, you pay a mortgage on a percentage and rent on the rest.

You can increase your shares in the property further down the line if your circumstances change. For example, this could pave the way for you to own the property outright.

If you're thinking about shared ownership, a calculator tool can help you to understand your position. A shared ownership mortgage calculator will also help you understand how much you can afford to borrow and what you can expect to repay in rent and mortgage repayments every month.

A shared ownership calculator will help you estimate how much you can save per year by using a percentage of the property and renting the remainder instead of paying rent on a whole home.

One popular shared ownership mortgage calculator is published by Help to Buy. It allows you to enter the full market value, share percentage and term over which the mortgage will be repaid. 

This can help you to understand the differences between a shared ownership scenario and outright ownership.

This all depends on the percentage of the property you intend to own. A good shared ownership calculator will include information about how much you can borrow and how much your repayments will be. The information you input to these tools could include:

The total price of the property
Your deposit
How much you need to borrow
The term of the mortgage
Your income
How much you can afford to spend

The calculator will then determine how much you can borrow using prevalent interest rates. If using a calculator from a specific lender, the rates will be more accurate.

Some lenders offer even more detail by using information from your credit file. This will only be used with your permission. This will offer a far more detailed understanding of how much you can afford to borrow.

There are three main types of shared ownership calculators that will help you understand your position. These are:

Affordability calculator

An affordability calculator will help you understand how much you can afford to borrow based on your income and deposit. This is by looking at the difference between what you can borrow with a mortgage and the cost of renting the remainder.

A shared ownership calculator could be used to figure out how much it would cost per month for your total loan and rental fees. This provides an estimate of how much money you'll be borrowing over a given period.

Shared ownership and rental calculator

A shared ownership and rental calculator will help you determine the monthly repayments for your loan and your rent. First, you input the property’s total price, your deposit, how much you need to borrow, and how long you want your mortgage to last.

The information is then used to calculate what % of the property you'll own and what % you'll rent. If possible, it’s best to use a shared ownership and rental calculator from a specific lender since they offer more accurate rates.

Repayment calculator for shared ownership

A repayment calculator for shared ownership is a calculator that can help you to understand how your monthly repayments will change over time. First, you input the property’s total price, the amount of money you'll borrow, and the term over which the mortgage will be repaid.
The tool will then calculate what % of the property you'll own and what you'll rent. It also calculates your monthly repayments and provides an option to show how they will change over time if you choose to increase your ownership percentage.

Some repayment calculators are more sophisticated than others and will include additional factors such as:

Ground rent: All shared ownership properties are sold on a leasehold basis. As the tenant, you will pay both ground rents and mortgage payments each year. Some advanced calculators consider this when showing the overall cost for living in a shared ownership property.

Disposable income: By calculating your disposable income, you'll get a much better idea of what you can afford to borrow and avoid getting into unmanageable debt. A good shared ownership calculator may include an expenses and income section to help you understand what you have left to pay for your mortgage.

Your credit history: Your credit score will play a huge role in the rates offered by lenders. Including credit history information in your calculations can help you get a better idea of how much you can borrow.

A broker will help you to understand your position when considering a shared ownership purchase in the following ways:

1) They'll discuss all aspects of the shared ownership plan with you before deciding whether it's right for you. This includes the monthly repayments and any ground rent involved.
2) They'll also ask about your prior ownership experience to help find the right property for you.
3) A good broker will also help ensure that there are no legal pitfalls or misunderstandings related to the contract that may lead to issues later on.
4) They may also offer advice about how many shares in a property is appropriate for you so that you can avoid getting into unmanageable debt.

Purchasing a shared ownership property is a big decision, and you should make sure that you are informed when making your choice. You can find a specialist mortgage broker today who will offer advice about the best rates for a loan, how much you can afford to borrow, and whether it's right for you.
When looking for mortgage brokers, certain factors will help you find the right match. For example, if you have a poor credit history, don't assume that this will rule you out of property ownership. We can often help individuals find a lender to suit their needs.