Mortgage Overpayment, Shared equity, Remortgaging question

JollyGiant

Just really looking for some advice as to whether or not this seems like a sensible plan. Have tried to give as much info as possible but if I hereto clarify anything please let me know.

At our last mortgage statement in September we had 27 years and £126,000 remaining. Mortgage is currently on a variable rate which I think is 3.99%. So this September we will still owe around £123,000. (I think)

We are in a shared equity deal with the developer owning 25% of our property. We have to buy them out by Sept 2019 and need to give them 25% of valuation price when we do so or 1/4 of the price we've sold our property for, whichever is highest. Our property current value is around £180,000.

Due to a few things, we are likely to have £4000 this month. We are planning to use this to make a lump sum overpayment on the mortgage. There is no penalty for doing so provided we don't pay more than 10% in any one year.

If we do this, then we'll have a mortgage for around£119,000 on a house worth £180,000. But we will also owe the developer around £45,000. This means we'll have 'debt' of £164,000. Which means we'll have £16,000 of equity.

We are hoping to move house in the next few years so would like to remortgage to pay the developer sooner rather than later. We'll, presumably, be in a better position to remortgage if our current mortgage is reduced by the £4000.

Does that all make sense? Are my figures or assumptions totally wrong? Any advice anyone could give would be hugely appreciated. Thank you.

amnblog

Looks like you will be trying to remortgage at about 90% loan to value.

The £4,000 will make the difference in tipping you under the 90% LTV threshold.

JollyGiant

Thank you. I'm glad we're on the right track.