Advice Please: Overpay or Save for my Shared Equity Mortgage

Ossie2007

Hi everyone

I could really do with some advice so any thoughts would be appreciated. To get to the point - I am a whisper away from 40 and have separated from my wife. We have two children. I am leaving my share of equity in the family home and am coming off that mortgage. However the only realistic option for me getting back on the property ladder anytime soon is to buy a property on the newbuild homebuy scheme which (as a key worker) allows me to purchase 50% of the market value, with options to buy back the remaining equity up to 100% if I chose to do so (at whatever the market value is at the time). Ultimately this is what I want to do.

The property I am purchasing is valued at 187,000. I am paying 10% of my 50% share as a deposit, leaving me with a mortgage of 84,450 fixed at 6.99% for three years before reverting to SVR (currently 4.99%). On top of the monthly repayment of £548.02 I have an additional £341.62 to pay the Rent and Service Charge to the housing association. That charge would reduce if and when I managed to buy back more equity.

I estimate that I can overpay about £700 per month. So here's the thing - would I be better off overpaying the mortgage on my 50% equity (I can overpay 20% of outstanding balance per year) and then remortgage for the remaining equity when it is paid off (in about 8 years time) or would I be better advised to save my overpayment as a cash fund to buy back more equity in, say, 7 or 8 years time? I know that this is a confusing one - my instinct is telling me to overpay as much as I can on my share of the equity and remortgage. Any advice would be very much appreciated!

dimbo61

If the equity and WHO pays the mortgage on the family home is sorted ?
You are buying a property big enough for yourself and the kids ( bedroom each if boy and girl!)
Overpay for next few years and increase your equity and reduce your debt THEN buy the other 50% when you can afford.
Build up an emergency fund 3/6 months of income

dimbo61

Dont forget CSA 20% of net take home pay for 2 kids until 19 years old
Even pay if you signed over the house and all the equity to your EX wife!
Better to overpay on a mortgage of 6.99% as not going to earn that kind of interest from savings accounts

Ossie2007

Thanks folks - I'll take the advice and try and overpay as much as I can.