Shared Ownership and Staircasing

Monkey_Joe

Can someone explain to me how staircasing works with shared ownership properties?

Ok, say for example I get a mortgage to buy a 40% share of a 2 bedroom flat that has a value of £160,000. Can someone explain the process of how I would go about increasing my shares to 80% in the future? Would I need to remortgage or can I get a top up from my original lender? Also, in regards to the deposit, will the original deposit and whatever I repayed from the original mortgage be enough?

A detailed breakdown of the whole process will be great.

VIGILANT22

Normally staircasing is allowed after the 2nd year.

Depending on the type of lease there may be restrictions on time and amount of staircasing, but often 25 per cent portions are available until you reach 100 per cent.

Depending on the type of mortgage you have you could either rmtg if applicable or apply for a further advance...obviously you would have to meet all criteria at the time.....

Monkey_Joe

VIGILANT22 wrote: »

Normally staircasing is allowed after the 2nd year.

Depending on the type of lease there may be restrictions on time and amount of staircasing, but often 25 per cent portions are available until you reach 100 per cent.

Depending on the type of mortgage you have you could either rmtg if applicable or apply for a further advance...obviously you would have to meet all criteria at the time.....

.

thanks for your advise. its not actually for me, my sister is interested in shared ownership since she can not afford to buy her house ouright yet

She has been given a mortgage with Barclays (fixed rate) for the 40% share, and its almost completed. I'm just confused about this whole staircasing thing since I assume, say after two years, she wanted to buy another 25% would she remortagage and borrow to cover the original 40% and the new 25% and if this was the case would she need to come up with another 15% deposit on her side for the 25% extra she is buying or the entire 65% she could potentially own?

very confusing.

VIGILANT22

No, she wouldn't need actual cash, she would just apply for a 65% mortgage, the solicitor doing the remortgage would receive the 25% from the lender to pay directly to the housing association....

It's not confusing if you just think that she is buying a further % every few years.....

Monkey_Joe

VIGILANT22 wrote: »

No, she wouldn't need actual cash, she would just apply for a 65% mortgage, the solicitor doing the remortgage would receive the 25% from the lender to pay directly to the housing association....

It's not confusing if you just think that she is buying a further % every few years.....

I see. I assumed that since your taking out a bigger borrowing with the lender they will expect you to match that with a bigger deposit.

2010 - buy 40% share. Provide 15% deposit
2012 - buy an additional 25% share. Get lender to top up original 40% mortgage to 65%, but you will need you to provide 15% deposit of the additional 25% equity you are buying.


If thats not the case then its pretty simple and straight forward (if you meet the lenders criteria).

getmore4less

The key to shared ownership and eventualy owning more is

1a. increased income(or allready be able to afford more).
1b. more income from new partner.

2. A capital injection, gift,lottery,inheritance,......

If in a mature job salary wise then you are stuffed.

price rises/falls don't help.

VIGILANT22

[QUOTE=Monkey_Joe;_(if you meet the lenders criteria).[/QUOTE]

Ye, that is the key...she can also sell in the future if she wishes...she should have been issued with all the documentation explaining this....

One of the problems with shared ownership is the lenders you're restricted to but that may change in the future........

Monkey_Joe

getmore4less wrote: »

The key to shared ownership and eventualy owning more is

1a. increased income(or allready be able to afford more).
1b. more income from new partner.

2. A capital injection, gift,lottery,inheritance,......

If in a mature job salary wise then you are stuffed.

price rises/falls don't help.

what do you mean mature job salary?

dimbo61

What gm4l means is that your sister may already be at her limit 4X income that the bank will lend her to buy 40% so how can she afford to buy another 25% in two years.
Now the bank maybe happy to lend her enough money to buy 40% with her 15% deposit but they may require her to have another 15% deposit for the extra lending in 2 years!
She also has to pay rent on the other 60% and may need to pay a service/management charge each month.
You need to check out all the costs and see if its worth your sister buying this property