Shared ownership mortgage

InhaleMood

Hi all,

I am trying to decide what to do regarding my shared ownership mortgage.
I currently own 30% of the £192,500 value of the property.
My mortgage repayments are £256.34 and the rent on the remaining is £356.66 = £613 a month.
I have a lump sum of £18000 in cash isa's at present, and I am trying to consider my options:
I could either dripfeed the overpayment in (10% I think). Or I could remortgage for the remaining 70% of the property. Or somewhere in between.
I don't really have anyone I can ask, and I don't trust my bank to give me impartial advice.
Could anyone give me any help?
The eventual aim is to become mortgage free, but I can't see that ever being reduced from the 25 year term!
Thanks,
Tanya

kingstreet

You're going to have to be more specific.

Only you can decide if you want to staircase upto higher or full ownership or if you simply want to overpay your mortgage.

The time to consider a major change to your mortgage is when any early repayment penalty has expired. In the interim, as you say, you can pay upto 10% of the mortgage off without penalty.

How effective this might be can only be determined by you, because you know your mortgage rate and you know your ISA rate.

yenool

If it were me then I would want to overpay the mortgage so I actually 'owned' my 30% share outright before considering buying a larger % of the house.

That is based purely on my own instincts of hating any kind of debt/finance and is almost certainly NOT sound financial advice.

Obviously if you own the whole thing you gain more if prices rise, put have the potential to end up in massive negative equity should prices crash. Plus if you do mortgage up the whole thing you could get stung if interest rates rise, where as at least the rent they set is fairly stable.

InhaleMood

kingstreet wrote: »

You're going to have to be more specific.

Only you can decide if you want to staircase upto higher or full ownership or if you simply want to overpay your mortgage.

The time to consider a major change to your mortgage is when any early repayment penalty has expired. In the interim, as you say, you can pay upto 10% of the mortgage off without penalty.

How effective this might be can only be determined by you, because you know your mortgage rate and you know your ISA rate.

If I was to get an additional loan for the remaining amount, I won't have to pay any early repayment charges.

Mortgage rate is 4.45% and ISA is 3.5%

I think I am keen to staircase to 100% as I won't have this sort of lump sum again for quite a while!

I guess there is a lot to think about. I live in London so I am hoping prices will gradually rise. If I buy the remaining 70% it will go on what the market value at that time is.
However, if interest rates rise and I am squeezed anyway it could be difficult!

Back to the drawing board I think.

Thanks for your help!

gaz141

you will need to factor in stamp duty also if you staircase up