Shared Ownership Mortgage Advise

Daveed1973

My 3 year fixed term shared ownership mortgage comes to and end in May and as this was my first mortgage I am not that clued up on this stuff and would like to know what my options are.

A little background to my situation first:

May 2008 brought a 25 % share of a shared ownership property. As it was a kind of rush job I didn't have a deposit so ended up having a 100% mortgage for the 25% I brought. The mortgage was for £35k and the property was valued at £140k.

When my fixed terms ends I would ideally like to purchase the other 75% of my property to fully own it, but again have no deposit to use at the moment. The mortgage I currently have is a repayment mortgage and have been repaying this for just under 3 years.

What would my options be with regards to getting a better rate mortgage at the least but ideally purchasing the other 75% given my current situation and the fact my property has probably devalued?

I'm quite confused by all this. Any help will be appreciated.

CloudCuckooLand

What SVR (standard variable rate) will your mortgage follow-on to? This may be better than you currently pay, if you are lucky.

Without a deposit, or any equity, you will be unable to remortgage elsewhere. Your current lender may offer a replacement product. But it probably won't be a scintillating % rate.

During the first 3 years, the repayment element of your mortgage will be a relatively small portion of the monthly payments you have been making, so I don't think that will counteract the devaluation of your property.

You could overpay, subject to Ts&Cs, to create some equity. But I'm guessing that's not an option, as if you had funds to spare they'd be building up savings/deposit pot...

If you cannot afford to save while only owning 25%, I'd doubt you can realistically afford to purchase the other 75%. As the rent on the other 75% is usually pretty reasonable. Although there are a range of schemes, so say if your rent is high. And having no deposit, any mortgage would be relatively expensive.

Bottom line appears to be that it doesn't sound like you can re-mortgage, purchase any extra % share, or obtain a better rate. Until you build up equity/deposit, of around 15% I'd suggest.

££sc££

I don't think there are any shared ownership mortgages on the market for 100% Loan to value these days (happy to be corrected).

My advice is get saving and look again at staircasing when you've got a deposit

poppy10_2

You are in negative equity on your share, and have next to no chance of extending your mortgage to increase your ownership stake

Daveed1973

Okay, my current interest rate is 7.29%. At the end of the fixed term it will revert to the standard rate which i believe is 5.69%. If I stay on this will my mortgage payments decrease or will I be able to continue paying the same amount and pay the mortgage off earlier?

I think when my new statement comes to me I will have paid around £1500 of the mortgage off, does this still mean I am negative equity?

CloudCuckooLand

Looks like prices for Derby are -11% since you bought.

[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=City+Of+Derby&s=01 April 2008&e=01 November 2010&t=1[/IMG]

i.e. Property now worth approx £125. Your 25% worth £31,250 ish. Having paid off £1500, you still owe around £33,500 = negative equity.

Your mortgage payments will drop when the 5.69% rate starts to apply. So, ring your lender up and ask for the payment to be kept the same so the difference can be used as an overpayment. You will eat into the capital outstanding quicker, and in time revert to having some equity with which you can then consider a re-mortgage.

ViolaLass

Daveed1973 wrote: »

Okay, my current interest rate is 7.29%. At the end of the fixed term it will revert to the standard rate which i believe is 5.69%. If I stay on this will my mortgage payments decrease or will I be able to continue paying the same amount and pay the mortgage off earlier?

Both. Up to you.

Daveed1973

As I suspected then. Oh well, at least as things stand my interest rate will be reduced and hopefully I can start making some overpayments.

ViolaLass

You could try going on the DFW (debt-free wannabe) forum and posting an SOA (statement of affairs) to see whether you can save any more money each month.