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  • FIRST POST
    • Lgas
    • By Lgas 16th Mar 17, 5:55 PM
    • 332Posts
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    Lgas
    Staircasing shared ownership
    • #1
    • 16th Mar 17, 5:55 PM
    Staircasing shared ownership 16th Mar 17 at 5:55 PM
    Hi, I have had a quick search but only came across very old threads. We bought our house in early 2011 for £155,000 at 50% mortgage 50% rent shared ownership.
    It is now worth around £197,000 (which is what next door hair sold for which is identical).

    My question is, do we try and staircase to the largest share we can or overpay on our current mortgage by as much as we can afford? We don't have plans to move in the near future, we love our house, but obviously the price is increasing and any more shares would be at the current market value.


    Thanks!
Page 1
    • donfanatico
    • By donfanatico 17th Mar 17, 10:09 AM
    • 451 Posts
    • 204 Thanks
    donfanatico
    • #2
    • 17th Mar 17, 10:09 AM
    • #2
    • 17th Mar 17, 10:09 AM
    I would say this, as this is my understanding - we only bought shared ownership recently.

    Read the lease and other terms to see if once you buy 100% you can sell freely and it is all yours without the HA having any say.
    If it is, then think about this. If you want to stay there for more years then it makes sense to buy up to 100% as the mortgage will come to and end but the rent will never (and it will keep increasing) OR if you want to sell and move then overpay as much as possible and with the price increase you will have hopefully enough equity to buy on the open market. You will need to do the sums.
    • Lgas
    • By Lgas 19th Mar 17, 3:46 PM
    • 332 Posts
    • 110 Thanks
    Lgas
    • #3
    • 19th Mar 17, 3:46 PM
    • #3
    • 19th Mar 17, 3:46 PM
    Thank you! It is a Bellway development and once you have staircased to 100% it becomes freehold. Overpaying on the mortgage sounds sensible as I don't think this is our "forever" home, I expect we will be here for another couple of years but we will want to move somewhere larger at some point I imagine.
    • Lgas
    • By Lgas 19th Mar 17, 3:47 PM
    • 332 Posts
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    Lgas
    • #4
    • 19th Mar 17, 3:47 PM
    • #4
    • 19th Mar 17, 3:47 PM
    I need to double check about selling it, I do vaguely remember Bellway asking to have first refusal to find a buyer but the paperwork isn't to hand.
    • AliceBanned
    • By AliceBanned 22nd Apr 17, 3:26 PM
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    AliceBanned
    • #5
    • 22nd Apr 17, 3:26 PM
    • #5
    • 22nd Apr 17, 3:26 PM
    Mine is shared ownership with a housing assoc and they have first refusal l to find a buyer for a nomination period of 2 months - after that I can sell either the share I own or if I find a purchaser who wants 100% they can buy 100% on the open market.


    I am in a similar situation to you in that I own 40% and prices have gone up a lot in the area - and wondering whether to staircase or not.
    DFW - goal December 2019

    _________________________
    • Lgas
    • By Lgas 30th Apr 17, 2:47 AM
    • 332 Posts
    • 110 Thanks
    Lgas
    • #6
    • 30th Apr 17, 2:47 AM
    • #6
    • 30th Apr 17, 2:47 AM
    Having found my paperwork it does say that Bellway have first refusal on whether they would like to find a buyer for it or not if we sell. We will be here for several years longer I'm sure but I'm still confused as to what the best plan is!
    • getmore4less
    • By getmore4less 30th Apr 17, 7:28 AM
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    getmore4less
    • #7
    • 30th Apr 17, 7:28 AM
    • #7
    • 30th Apr 17, 7:28 AM
    its a numbers game.

    you pay rent and don't get any gain in value.
    you rent the money and get the gain in value.

    Over the 6 years you have lost about £20k of value increase
    what was the difference between the two rents.

    Either way you are 100% liable for maintaining the place so not really shared ownership.

    also each staircase you pay the costs.
    • Lgas
    • By Lgas 30th Apr 17, 1:53 PM
    • 332 Posts
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    Lgas
    • #8
    • 30th Apr 17, 1:53 PM
    • #8
    • 30th Apr 17, 1:53 PM
    Thank you, that does make sense, I believe our rent started at around £260 and is now at £315 after 6 years. We currently pay £530 a month for the rent and mortgage combined, if we staircased we would do it in one go to 100% and at the current variable rate (so top end/worse case) the mortgage would be around £860, so a bit of a jump, but then it's not money going down the drain towards rent.
    • Lilla D
    • By Lilla D 30th Apr 17, 2:08 PM
    • 316 Posts
    • 160 Thanks
    Lilla D
    • #9
    • 30th Apr 17, 2:08 PM
    • #9
    • 30th Apr 17, 2:08 PM
    Assuming that you're not locked into a mortgage deal at the time when you'd buy the remaining share, you would effectively do a remortgage with capital raising instead of taking a further advance. I mention this, because some lenders' further advance rates are higher than remortgage rates for the same LTV level.

    When you remortgage, you can either keep the same mortgage term as what it is now or you can change it to a shorter/longer term. This will have an impact on your monthly payments. The longer the term, the lower the monthly payment, but you'd pay more interest overall. This way you can tailor the term to your budget. And if you do find yourself with extra disposable cash, most deals allow for overpayments to reduce the mortgage balance quicker.
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • getmore4less
    • By getmore4less 30th Apr 17, 8:13 PM
    • 30,007 Posts
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    getmore4less
    Thank you, that does make sense, I believe our rent started at around £260 and is now at £315 after 6 years. We currently pay £530 a month for the rent and mortgage combined, if we staircased we would do it in one go to 100% and at the current variable rate (so top end/worse case) the mortgage would be around £860, so a bit of a jump, but then it's not money going down the drain towards rent.
    Originally posted by Lgas
    1/2 of £155k rent £260pm that's just over 4.03%
    1/2 of £197k rent £315pm that's just under 3.84%

    If you can borrow at 4%(ish). it is costing the same.

    it is not the repayment you use to compare just the interest rate.
    • getmore4less
    • By getmore4less 30th Apr 17, 8:21 PM
    • 30,007 Posts
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    getmore4less
    £215 seems low for a 6y old £77k mortgage have you been overpaying?
    • Lgas
    • By Lgas 2nd May 17, 9:14 PM
    • 332 Posts
    • 110 Thanks
    Lgas
    £215 seems low for a 6y old £77k mortgage have you been overpaying?
    Originally posted by getmore4less
    Oops, I got the figures mixed up, apologies! The rent is actually £215 (I still think it's gone up around £40/month since we purchased the house) and the mortgage is £320!
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