What is a shared equity loan purchase?
Under Shared Equity schemes, a first time buyer can buy part of a property at open market value by raising a mortgage. The remaining part of the property is funded by a government backed equity loan. The property purchased must be available on the open market ie a freehold or leasehold property. The purchaser can not use the equity loan to buy a share in a Shared Ownership property offered by a Housing Association or a council owned home. If the purchaser chooses to sell the property, the government is entitled to receive their share of the value of the property at the time of sale. (i.e. if the property is worth more than it was at the time of the original purchase, then the split in the increased value (equity) is based on the owner’s purchase share and the government’s equity loan share.
