Do I need a mortgage deposit ?

Blue_belt

I am currently in a shared equity scheme with my employer. The property is worth roughly £250,000. I hold a 50 % share via my mortgage. I have been overpaying this mortgage every month and it will soon be paid off. At this point I am planning on taking out a new mortgage so that I can purchase the remaining 50% of the house from my employer. My question is "would I need a deposit for this mortgage?" I would own 50% of the property and be taking out a mortgage for the remaining 50%. Is my ownership of 50% of the property good enough or would I need a cash deposit as well ? Thanks

Horseunderwater

Having paid off the full mortgage on your half - you will technically have a 50% deposit, so what I would do is contact some mortgage brokers and ask for some independent advice on this. The motley fool web site were very helpful when I used them - their broker is London and country mortgages and they do not charge fees to borrowers.

TrickyDicky101

No, your existing equity would effectively represent your 'deposit', so you won't need a further cash deposit too.

kingstreet

Are you sure you mean shared equity?

If you do, you own all your property and your employer has a second charge over the property for the money it lent you to purchase.

You can remortgage to repay the equity loan, but bear in mind, you will repay 50% of the current value of the property, not the amount you borrowed at purchase.

If you are talking about shared ownership, where you own 50% and a (eg) Housing Association owns 50%, the process is different, as you are actually purchasing additional equity and this could have stamp duty implications, if you made no market value election at time of initial purchase.

In answer to your direct question, both transactions are technically remortgages and the equity you hold in the property becomes your "deposit" as TD said.