50% shared ownership - buying other half

martyp

Hi all,

I bought my house for £110 in 2005 as a 50% shared ownership.
I'm wondering whether to take advantage of falling house prices by buying the other half when prices reach a low point?
I'm not that sure how the whole thing works but I know I can own 100% of the property for sure. They say if I sold the house or wanted to buy the other half it would be 50% of the house value less any improvements I had made.
In theory, if I got a mortgage for £55k in 2005 and the house was maybe valued at only £100k during the recession, I could buy the other half for only £50k?

Has anyone here bought the remaining share of a shared ownership property before? How does it work with the mortgage company? Is it relatively easy to do?

dunclane

Hi, I also had a 50% share in a property and after 3 years bought the 2nd half as my income increased. My mortgage was with Nationwide and it was very easy to do, all they did was value the property and due to the overall mortgage required being under 95% (dont know what they will require now though) they just increased the mortgage. You will need to pay for solicitors fees though.

martyp

dunclane wrote: »

Hi, I also had a 50% share in a property and after 3 years bought the 2nd half as my income increased. My mortgage was with Nationwide and it was very easy to do, all they did was value the property and due to the overall mortgage required being under 95% (dont know what they will require now though) they just increased the mortgage. You will need to pay for solicitors fees though.

Many thanks dunclane. I'm with Halifax, hopefully they'd be easy to deal with. I do wonder now if I ever needed to sell the house during the recession that it'd quite possibly be more attractive to buyers being 50% share rather than paying the full house price.

Richard_Webster

If OP's SO is with a Housing Association there will almost certainly be a requirement that until he has bought the whole 100% he must offer it to people on the HA's list at a price to be determined by the HA's surveyor - can't just sell on the open market.

I'm assuming OP paid £55K for a 50% share with a £55K mortgage.

So if property now worth £100K (100%) then he would need to find £50K to buy the remaining 50% but he is going to struggle to borrow more than 90% of value so that would be £90K altogether. Subtract £55K already borrowed so he would only be able to borrow another £35K so this will only work if he has £15K cash to put in.

martyp

Richard_Webster wrote: »

If OP's SO is with a Housing Association there will almost certainly be a requirement that until he has bought the whole 100% he must offer it to people on the HA's list at a price to be determined by the HA's surveyor - can't just sell on the open market.

I'm assuming OP paid £55K for a 50% share with a £55K mortgage.

So if property now worth £100K (100%) then he would need to find £50K to buy the remaining 50% but he is going to struggle to borrow more than 90% of value so that would be £90K altogether. Subtract £55K already borrowed so he would only be able to borrow another £35K so this will only work if he has £15K cash to put in.

Very good point, I didn't think about the mortgage being £105k on a house valued at £100k. I really wouldn't be able to come up with an extra £15k. I got the mortgage of nearly £55k in May 2005 and borrowed £3k on the mortgage in June 2007 and the balance is now £55k. I think all I've done since June 2007 is pay of most of the £3k I borrowed. With that money I got a new bathroom which I should be taken into account when buying the other half.

Thumper7

Hi Martyp

When I bought the remaining 75% of my Shared Ownership property in 2003 (albeit this was in Scotland). The property was valued by the District Valuer's Office. As I was changing mortgage providers I also had to have a open market value survey done.

The District Valuers office came back with a valuation of 64,000 which the Housing Association had to adhere to and the open market value survey came back as 70,000.

My original 25% mortgage was 11,875.00
The 75% mortgage was 48,000

So my total new mortgage was 59,875 which worked out on the open market value as LTV of circa 85%.

thumper

Helga14

You may find they don't take much account of your improvements. They will only account what the improvement will have done to your value and not necessary take into the sum what you spent. So you may have spent £2000 on the bathroom but they will say it only adds £1000 to the valuation.