50% shared housing

mkwelshie

Hi there,

I'm currently living in a Flat that I own 50% share in which I have owned for 7 years. I’m currently on a mortgage repayment and paying rent to the housing association for the other half. I’m currently living with my partner and we are looking to move to a house so we can have a garden etc. My question is:

A) Should I buy the other half of the mortgage to then sell the flat?
Should I not buy the other half as shared ownership flats are selling?
C) Is it possible to purchase the other half of the flat and use the equity in the flat as a deposit for a second mortgage then rent out the flat?

Preferably I’d like to be able to keep the flat and rent that out for the mortgage payment and use the equity to purchase the house but obviously with the climate as it is, is this possible or should we be looking to keep the flat for a time being until things on the market improve?

Any clarification or advice would be greatly appreciated

kingstreet

How much equity do you have? You say you own 50% with a mortgage and could staircase upto 100%. Will this also need a mortgage?

A) We can't really answer this. You know your flat and your area and need to research the sales of part and fully owned similar flats.

See A

C) Depends on how much equity you have. You'd need to borrow at least 10% of the price of the new property plus fees, on top of the staircased mortgage you will then have.

The one problem you may not have considered is the HA. Despite you owning all the property, this is still a leasehold flat and you will still need the permission of the HA to let it.

In addition, the mortgage will need to be taken on a buy to let basis and this will reduce the likely maximum loan to value to perhaps 80%. Otherwise you'll need consent to let from a residential mortgage straight after you take it out. Not good.

The most relevant issue here is the equity. It will clearly determine your options.

property.advert

If it is of any use, I wouldn't touch shared ownership with a barge pole. I also know some shared ownership properties cannot be owned 100% but only up to 90%. You would need to check that first.

Personally I would buy the other half if you can. Why ? because the rate on your mortgage (for occupation) is almost certainly to be less than the implied rate in the rent you pay. Do observe however that you would then be liable for 100% of the service charges as opposed to 50% now.

If you want it as a BTL, you will need a larger overall deposit and your interest rate will be higher