Shared ownership question

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!

Richard_Webster

You can remortgage, but you can only borrow in total whatever percentage of the value is the maximum your lender will lend.

If the house is valued at £160000 and you buy half for £80000 with a 90% (assuming that is the maximum you can get) mortgage of £72000 and you would have to find £8000 plus costs.

If the values stay the same in a year's time and you can afford it then you could borrow another £72000 on top but you would have to find a further £8000 of your own money.

If it is a new house then it might be overpriced so in a year's time might only be worth £140K then assuming a 90% maximum the most you could borrow in total would be £126K but the HA would want £70K for the half share but your lender would only lend £126K-£72K = £54K more so you would have to find £16K more of your own funds.

You would normally get the freehold once you bought the 100%.