shared ownership questions

mattdragon2

Hi,

I viewed a house which is 50% shared ownership.

They said after 12 months I can buy the rest of the 50% or as much as I want.

My questions are:

Do I have to pay by cash to purchase the rest of the 50% or can I remortgage to cover the rest of the cost?

Also, it says its a leasehold, does that become a freehold when I own 100% of the mortgage??

Thanks!

brit1234

Is it a flat if it is it is likely to be leasehold only.

Personally you are going to have to read the small print for the rest as there are many shared ownership companies all with a neverending list of conditions different from the others.

Personally I would stay clear all my key worker friends are having various problems with them due to these extra conditions and negative equity. They are also vey overpriced and have lots of extra costs such as rent and high service charges.

As prices have started to crash again (both Nationwide and Halifax sources) you are better saving and buying a normal property.

Shared equity was a con to inflate prices and now looks like a very bad idea for those who bought.

mhendo

Yes, you can remortgage - either with existing mortgage provider, or a new one. As long as the LTV is still OK - assuming you bought as new, it may take a slight dip in value initially.

You'll have to check with the HA you got the shared-ownership property from, or check your lease/staircasing documents - usually if its a house, when you buy the remaining equity (to 100% ownership), you'll get the freehold.

mattdragon2

It is a 3 bedroom house, its not a new house.

Are the prices fixed or can you offer less. The estate agent said the price is pretty much fixed but they want a quick sale. I don't know if the estate agent was just saying that so I wouldn't offer lower?

Say the property is 100k for 50% share. If the house falls or rises in price in a year and I want to remortgage, can I just get a mortgage for the rest of the 100k or do I need to pay more because the house has gone up in value?

Thanks for the advice!

brit1234

I think the price is pretty rigged through housing association, takes a fair few procedures and time for them to lower it.

mhendo

mattdragon2 wrote: »

Say the property is 100k for 50% share. If the house falls or rises in price in a year and I want to remortgage, can I just get a mortgage for the rest of the 100k or do I need to pay more because the house has gone up in value?

Thanks for the advice!

When you buy more of a share, you will need to:-
1) pay the HA to arrange a valuation (this may be a private valuer, or the District Valuer).
2) Possibly pay your mortgage provider (or definitely with new mortgage) to arrange for their valuation.
3) pay the HA the pro-rata amount for the extra share (eg, new valuation is £120k - 50% of this would be £60k)

In this example, you would have paid £110k for the property (original £50k plus £60k), plus two sets of mortgage arrangement fees, solicitor fees for both purchases, all the valuations, and any rent you paid in the 12 months.

On the plus side, if the property goes down in value (and their valuation agrees), then you'll pay 50% of that lower valuation.

mattdragon2

So if I bought the house, I end up with 1 mortgage.

If I then want to purchase the other 50%, do I have to get a 2nd mortgage on top of that? Or do I just apply for 1 mortgage to cover the whole cost?

mhendo

You'd remortgage to buy more equity - it would be one mortgage.