Remortgage for shared ownership

gerri2011

I am hoping I can get some advice regarding shared ownership. I own 50% of a shared ownership flat and pay the mortgage plus rent.
The total amount of the mortgage and rent comes to a hefty sum which I pay out every month. I was wondering if I could get a mortgage for the other 50%, which would give me 100% ownership of the flat, plus I would not have to pay the rent. Would I be looking at a remortgage of the total amount of what the flat is currently worth? Or would I look for a mortgage of just the other 50%? Sorry I am no good when it comes to mortgage no hows and hope that someone out there knows enough to offer advice. Thanks in advance.

kingstreet

So, you're actually looking to staircase up to 100% ownership?

First thing you need to do is check your paperwork to see the HA's procedure. Once you've done that, approach them to see what they wish to do regarding the valuation. This will determine how much you're going to have to pay for the share you don't already own.

Did you pay stamp duty on your initial purchase? If you did, there may be none to pay on staircasing. If you didn't it could be payable at this time.

You have two options, mortgage-wise. You can ask your current lender for additional borrowing to purchase the extra share, leaving you with a mortgage split into two sub-accounts to cover the two rates which apply to your mortgage (the current bit on one, the new bit on the other) or you can approach a new lender for a mortgage for the whole amount. This would repay the current mortgage and raise the funds to purchase the other share.

Being able to do this will depend on how much equity you have in your current share. The lender is likely to want at least 5%, possibly 10%, of the full value of the property to belong to you already.

gerri2011

Thanks Kingstreet, I have checked with the management company and they say they arrange a valuation, which costs around £85. From what you suggest, the first option whereby I approach my existing lender may be the cheaper option, as I think perhaps if I go elsewhere and re mortgage the whole amount it is likely to cost more in fees.

I am hoping I may be able to get away with paying more or less the same or slightly more for a mortgage, as what I am now paying in rent and mortgage together.

kingstreet

TBH I'd look at both, additional borrowing and remortgage.

Once you have the costings for both options, you can then decide on the most sensible route for you.

Staying with your existing lender may result in a better overall deal, or it may not. Many lenders offer fee-free remortgage products, while some lenders charge fees for their additional borrowing/further advance products.

gerri2011

Of course a stumbling block I may fall upon is the fact that I would be purchasing the extra 50% alone and not sure if they would lend on just my salary. Any idea as to how the formula is worked out? Is it three or four times a salary that lenders will loan?

kingstreet

It varies from lender to lender. Standard income multiples run from 3x to 5x gross annual income, net of any dependents or credit commitments.

Try your lender's online calculator and see what the overall maximum would be.