Shared Equity

Equity loans or ‘shared equity’ as they are commonly known have been around for a number of years. Unlike shared ownership, you own your home outright from day one but only purchase part of it upfront. The remainder is held as a second-charge loan which you will have to pay back within a defined period of time.

Typically, you will purchase between 75% and 90% of the property upfront, most people will obtain a mortgage to do this. The remaining percentage will normally need repaying within 10 to 25 years depending upon the provider.

Interest is often charged on the part not purchased (equity loan) at around 3% per annum. Shared equity schemes are offered by a number of providers but mostly on new homes. Most of the large housing developers have such schemes on selected sites and selected plots. The Government has joined housing developers in promoting these schemes.