Shared Onwership Question

SteveStone

Hi,

I own a 50/50 shared ownership property and my question is that with the overall value of the property decreasing will it cost me less to purchase the other half?

I paid £66000 for the first 50% giving a value of £132000. The flat is now worth about £100000

Janec2

It is supposed to be based on current market value. If the value had gone up, it would certainly cost you more. I dont see how it shouldnt work the other way around.
We are just in the process of buying a S/O property, so Id be interested to know how you get on

Richard_Webster

There can be problems with LTV ratios if you need a further advance to buy the other 50%.

Let's assume place originally worth £160,000 and you bought 50% with a 95% mortgage of £76,000.

Say now worth £140,000 so they will want £70,000 for 50% share.

Your existing 50% has £6K negative equity. So if you want to borrow 95% of value (assuming they will do this still, big assumption!) then lender might be prepared to increased lending to £133K. This is because they look at the LTV ratio on the vlaue of the property as a whole, not on the "share" you are buying! Take off £76K you still owe so the actual further advance is only £57K, so you have actually got to find £13K of your own money to put in.

If they will only lend 90% then you get £126K which only give you £50K and leaves you £20K short and so on.