The same advantages and disadvantages also apply to Shared Equity.
Advantages:
- long-term security over where you live
- greater control over the furniture, decor and upkeep of your home
- it is generally an investment for the future
- can enable future moves up the housing ladder
Disadvantages:
- it can be expensive depending on where you want to live
- ongoing maintenance and repairs take time, can be costly and can cause worry
- costs are less predictable and unexpected repair costs can be high
- when the market is slow, moving can take longer than anticipated
- in order to keep long term mortgage costs to a minimum, it may be necessary to re-mortgage every few years and this may incur some one-off costs.
Shared ownership
Shared ownership is a cross between renting (normally from a housing association) and owning a house.
Advantages:
- makes home ownership possible if you are on a lower income
- you only pay a mortgage on the share of the property you own and pay rent on the part you don't own.
- you can gradually increase how much you own, from 25 to 50 to 75 per cent, and then own outright.
- your share may increase in value so you're investing for the future.
Disadvantages:
- you need to register with a housing association or co-operative and wait until a suitable property is available (although some shared ownership re-sales are available on the open market)
- you are responsible for all the maintenance costs regardless of whether you own 25 per cent or all of the property
- you will need to re-mortgage every time you increase your level of ownership and this may incur some charges from your lender.
- if demand for housing is low in the area you have bought, selling your share may be difficult.