Glossary · UK
What is Shared Equity Scheme?
An umbrella term for government or developer schemes where a third party takes a percentage stake in a home to reduce the deposit and mortgage a buyer needs.
Full Definition
Shared equity is the general term for schemes in which a buyer does not need to fund 100% of a property's value through savings and mortgage -- a government body, housing association or developer instead provides an equity loan or stake, typically 5-40% of the purchase price, in exchange for a proportionate share of the property's future value. It differs from shared ownership, where the buyer owns a percentage of the property outright (via a lease) and pays rent on the rest -- in a shared equity scheme the buyer usually owns 100% of the legal title from day one but owes the equity loan back on sale or remortgage. UK examples include the (now-closed in England) Help to Buy equity loan, Deposit Unlock, First Homes, and various Scottish and Welsh shared equity schemes. Interest is often charged on the loan after an initial interest-free period, and the amount repaid rises and falls with the property's value, not a fixed cash sum.