The simple idea
In shared ownership, you usually pay two things each month:
- Mortgage payment on the share you own (repayment or interest-only).
- Rent on the share you don’t own (often “interest-like” — it doesn’t reduce your mortgage balance because you don’t own that part yet).
So your monthly cost is often mortgage + rent, not just mortgage.
Why rent feels like “interest-only”
With a repayment mortgage, part of each payment reduces what you owe (capital repayment), so you build equity over time. Rent on the unowned share is different: it’s a fee for using the landlord’s share, so it usually doesn’t pay down a loan balance in your name.
Pros and cons of higher vs lower ownership
Higher ownership
- Pros: Less rent exposure (smaller unowned share).
- Pros: More of your outgo can build equity (if repayment mortgage).
- Cons: Larger mortgage needed; affordability may be tighter.
Lower ownership
- Pros: Smaller mortgage needed upfront; may help affordability.
- Cons: Higher rent exposure and rent doesn’t reduce your mortgage balance.
Important disclaimers
- This page is for information only and does not constitute financial advice.
- Shared ownership can include other costs not modelled here (service charges, fees, insurance).
- Rent may increase over time depending on scheme rules.