With figures that show how few potential first-time buyers earn enough to get the mortgage they need on a typical first home, the bottom rung of the housing ladder is now being pulled even further out of reach.
In an article on Money Advice Service, Accountancy firm KPMG says the usual salary in England is about £22,044. Nevertheless, homebuyers need to earn at least £40,583 in order to have enough to apply for a mortgage for starter real estate. In areas like London, the gap is even greater. Workers earn with an average wage of £27,999, however they need to earn £76,971 just to afford their own homes.
As cited in a news on This Is Money, the London-based housing association Family Mosaic Director, Dick Mortimer, said: "With house prices rising faster than most salaries, it is little wonder that so many people are turning to shared ownership as the only way they can get on the housing ladder."
With shared ownership Mortimer said: "You first have to pass an income eligibility test. Typically, to qualify you - or you and your partner together - need to earn less than £60,000 a year although the figure is higher in London (£85,000 or less if you are buying a three-bedroom home)."
In addition to that, Mortimer said in a statement: "You can then get a mortgage to buy between 25 and 75 per cent of a flat or house, normally offered through a housing association." He further said that: "You pay rent on the part of the home you do not own, but you can take out further mortgages and buy bigger slices until you own the home outright. This is a process known as staircasing."
Buyers have to make an upfront payment or deposit which is typically 10% of the share they are going to procure. Other costs like "legal, valuation and mortgage fees and possibly stamp duty" must also be considered by potential buyers.