Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

    • brn1411
    • By brn1411 7th Jan 18, 10:53 AM
    • 2Posts
    • 0Thanks
    Equity release during remortgaging and staircasing shared ownership
    • #1
    • 7th Jan 18, 10:53 AM
    Equity release during remortgaging and staircasing shared ownership 7th Jan 18 at 10:53 AM
    Hi, been reading the threads and didn't get a clear picture. Question I have is can equity be released for the % you own on remortgaging and staircasing a shared ownership??

    I explain better with numbers, so a simple example below (assume staircasing is to 100%):

    Initial full value of house - £500k of which 50% owned on shared ownership. So £250k.
    Mortgage taken out then - £210k with remaining 40k being a deposit.
    Current outstanding mortgage - £175k.
    Current value of flat on revaluation - £550k. (therefore 50% is £275k).

    With outstanding mortgage being 175k, i believe £100k is my equity now? Correct?
    Which means I would need a mortgage of 450k? (550-100)

    If i can only afford a mortgage of 400k based on my salary, can i raise the remaining amount through equity release of the 100k???

    I may have made it complex while trying to keep it simple!!

    Thank you!
Page 1
    • 00ec25
    • By 00ec25 7th Jan 18, 12:25 PM
    • 6,101 Posts
    • 5,601 Thanks
    • #2
    • 7th Jan 18, 12:25 PM
    • #2
    • 7th Jan 18, 12:25 PM
    you wish to buy a property "worth" 550k by staircasing to 100%

    you currently own 50%, therefore you need to pay the other owner 275k for their 50% that you wish to purchase

    you currently have a mortgage of 175k and will need to get a new mortgage of 175 + 275 = 450k

    you say you can only afford 400k as borrowings so, no, you cannot "release equity" because you seem to have misunderstood what that means:
    either you sell something and release the equity as cash from the profit (sale - o/s borrowing repaid)
    or you borrow against a higher value and release the cash by increasing the amount borrowed against the higher value

    you cannot afford to buy 100% unless you inject 50k of cash from your own savings (you cannot borrow it and it is not available for "release") as you do not have the ability to pay the full 450k purchase price for the 100%
    • Cakeguts
    • By Cakeguts 7th Jan 18, 1:46 PM
    • 3,928 Posts
    • 5,433 Thanks
    • #3
    • 7th Jan 18, 1:46 PM
    • #3
    • 7th Jan 18, 1:46 PM
    Start again. You want to buy a flat valued at £550k for the 100%. You do not have the £550k in savings so you borrow the money to pay for the flat. At the moment you have paid £100k out of your own money for the flat and you need to borrow another £450k to pay for the rest of it.

    The only way you can get that £100k out of the flat now is to sell the flat to someone else who wants to buy your 50% for £275k. If that happened the mortgage company would get their £175k back and you would get £100k but you would not have the flat anymore.

    You are paying someone ( housing association ?) £550k for a flat. You can't afford to borrow the whole £550k so you have managed to pay 100k towards it out of money you had and money you paid off the mortgage and money you got from the increase in value from your current 50%. So you have paid £100k to wards the whole cost. You now owe only £450k instead of £550k.
    • ViolaLass
    • By ViolaLass 7th Jan 18, 1:51 PM
    • 5,262 Posts
    • 7,292 Thanks
    • #4
    • 7th Jan 18, 1:51 PM
    • #4
    • 7th Jan 18, 1:51 PM
    You cannot pay for £200k worth of house by handing over the same £100k twice.
    • brn1411
    • By brn1411 7th Jan 18, 2:23 PM
    • 2 Posts
    • 0 Thanks
    • #5
    • 7th Jan 18, 2:23 PM
    • #5
    • 7th Jan 18, 2:23 PM
    Understood. its more straightforward that i thought it was!

    thank you
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,661Posts Today

7,134Users online

Martin's Twitter