Shared ownership issue

frazer1

Hi

Im new to this forum but already liking the look of it!

I am in a shared ownership proerty with my wife. Its a 2 bedroom apartment and we moved in in May 2007.

The apartment was valued at 155k.

We purchaed 35% to start with which required us to get a mortgage for £54,250

Our mortgage is up for renewal next may as we had a 3 year fixed term.

I am guessing that the overall value of my apartment has decreased so my question is what are my options!

We ideally wish to move out next may to ,if possible, get into a house with a garden etc as we wish to start a family. Is this possible? will i be able to get out even though my share in the flat is now probably worth less than what i mortgaged for at the time? We have no savings of any note. If this isnt possible then could i remortgage but own as much of my apartment as possible so that when the better times arrive in the housing market i will have more to put down into a new place?

Thanks in advance

ruggedtoast

Its entirely down to your mortgage company.

Generally if you cant clear your mortgage debt either by selling your property or using savings then you are unlikely to be able to move.

Some mortgages are portable so you can move them to another property (rather than clearning the debt and starting again with a new loan) As presumably you are upgrading you'd be asking for a bigger loan on a more expensive property with a lower loan to value ratio (as you have no savings).

You dont say if its a private or HA scheme but in either case the Shared Ownership thing certainly wont help, as its unlikely the other party will be particularly keen to acknowledge the drop in value. Especially if its less than when you took it on.

Edit: I would be extremely wary of taking on more debt to "own" a bigger portion of this property. Shared Ownership has never been good value and you are exposing yourself to a lot more risk of negative equity by staircasing. It depends on the rental reduction etc but I bet you once youve done the sums its not worth it in a falling market.

frazer1

Hi

Thanks for your reply.

Its with a HA i think so im guessing they wont want to take that reduction.

I think i will contact my mortgage company in that case then and see what they say. I would be happy to stay with them. I guess that seeing as my apartments value has dropped and i dont have any capitol to take into a new mortgage then i will effectively be taking out a new 100% mortgage? I may be wrong but if that is the case could i get a 100% mortgage as i am not technically a first time buyer?

castle96

100% mortgage nowadays ? No way, sorry

frazer1

castle96 wrote: »

100% mortgage nowadays ? No way, sorry

Thats what i guess im asking then. What would my mortgage company do for me if they dont do 100% mortgages and the share in my flat is worth less than what i got a mortgage for?

Wickedkitten

frazer1 wrote: »

Thats what i guess im asking then. What would my mortgage company do for me if they dont do 100% mortgages and the share in my flat is worth less than what i got a mortgage for?

They will just move you onto the SVR

frazer1

Wickedkitten wrote: »

They will just move you onto the SVR

Whats an SVR?

Wickedkitten

frazer1 wrote: »

Whats an SVR?

The lenders standard variable rate. If you go to their webpage you should be able to find out what that is at the moment.

frazer1

Wickedkitten wrote: »

The lenders standard variable rate. If you go to their webpage you should be able to find out what that is at the moment.

I see, sorry im new to this!!

Thanks for your help.

So would they write to me in good time discussing my options? I assume if i cant do anything then they would move me onto there SVR as soon as my current deal expires. In theory then, would i be able to find a new property and just ask them to transfer my new mortgage over to that, albeit i will be on there SVR

lincroft1710

I don't know what your finances are, but taking on a big mortgage and starting a family are going to be a bit of a strain on them, might it be an idea to wait and get some money saved or stay put for next 2/3 years, it would be a year or two before any baby would be playing in a garden.

Comyface

frazer1 wrote: »

So would they write to me in good time discussing my options? I assume if i cant do anything then they would move me onto there SVR as soon as my current deal expires. In theory then, would i be able to find a new property and just ask them to transfer my new mortgage over to that, albeit i will be on there SVR

Unfortunately not, sorry. Yes, they will write to you when your deal expires telling you what the SVR is and what your new payments will be, but to take a new mortgage out for a new property you will need a deposit. If there's no equity, you'd have to provide it yourselves out of savings. And most lenders now won't let you port the SVR to a new mortgage, only to take a 'deal' (fixed, tracker rate etc.).