Staircasing to 100% - some advice needed

carnut1234

Hello Everyone,

Im hoping you can help.

Back in feb I had managed to buy my first house. The house was bought through Jephsons housing association.

I had bought a 25% share in the house. The house was valued at £152k but due to its popularity (6 offers in 2 days) we decided to pay a little more. Our offer was £38,250 which was accepted. Due to some issues with my wifes overdraft leaving her with a default I had to take on the mortagage myself.

It is stated that after 1 year of owning the property I can staircase and infact purchase 100% of the property. This is something I want to do very quick for reasons I will explain.

The house we bought was built in 1978, the lady who bought it had lived in the house until she died (at hospital) and then we bought the house. Unfortunately the house had not once been updated so it was in need of a complete revamp. After applying for permission through jephsons to carry out some work and having it checked by my solicitor we were able to have some work done. Now it has been checked and when we do come to buy the whole house we will need to have the house valued as if the house increases in value due to the work we have done then we should be able to still purchase the remainder of the house at the price before work was carried out. Now looking at houses in the area which are all the same design our house is now worth about 180k. Due to the work we have done which includes: new kitchen, bathroom, complete central heating(house came with warm air heating) complete new flooring, everywhere re plastered, new electrics, lighting, insulation, complete garden refurb including huge decking area and the list goes on. so we have made around £25k. so when we come to purchase the full share it has been agreed that they will be buying the house on the old value plus any inflation etc. im thinking that the house without the work we have done may have crept up to £156k at the most. So this is the reason why I want to push on and buy the house. As requested by the solicitor we have kept all the receipts and photos of each stage to show we have done the work to insure we don’t lose our equity we have made in the house.

Anyway the question or advice is really how to proceed when the time comes which is feb 2014. The idea is to remortgage on a joint application with me and the wife for the full 100%. We are currently in a 5 year fixed well almost 4 years fixed with Woolwich. Would they be able to increase the mortgage amount on a joint application? Would it need to be a complete different mortgage as it wouldn’t be for a shared equity its just like a normal mortgage.

Would I need to add anymore deposit? As far as im aware I would only need to just remortgage not increase my deposit I put down which was £6,250.

Im just looking for some more advice on how to proceed or where to start. What charges will I incur again etc.

Sorry for the long winded explanation I hope you can help.

Regards

daniel

jacobtheamish

It is my understanding of Shared Ownership, that when the tenant wishes to staircase, a current market value is applied irrelevant of the price paid or improvements made.

With regards to the mortgage, you may want to check with the current lender as to regards of options on moving from SO to standard home purchase. Your deposit will need to be in line with the LTV's offered. You really would be advised to speak to a broker, in fact you would be bonkers not to

carnut1234

Hello,

what i have researched and recieved from the housing association that the valuer will exclude works carried out on the house. this is the exact wording i recieved from the housing assosiation.

"In terms of the value increasing due to alterations. if you were to sell this property on as a share, then you will only be entitled to a share worth of the property value. The only way to protect yourself in this is to buy the property outright, our valuer will then exclude any home improvements carried out to the property. This way you have saved the money that you have spent and keep the capital value. "


I will absolutley be receiving some advice from a broker and i will speak to the mortgage lender but not untill early next year. what im trying to do is gather some information so when i do look into it i will be loaded with questions and answers to everything. i did the same for when i first went for my mortgage and the information given here was amazing and really helped me understand everything when i did then go to the broker.

thanks

dan

jacobtheamish

There are Shared ownership rules/guidelines as defined by the Homes and Communities Agency and then there are the Housing Associations interpretation. We work with a number of Housing associations, all would take the current valuation when providing costs of stair casing or outright purchase.

What deposit/equity will you have when you want to purchase the remaining share?
The number of lenders who offer SO mortgages are quite limited, so obviously once you buy out the Housing association it will open your options to a far bigger mortgage market.

carnut1234

The share we have at the moment is 25%. We found it very difficult to get a mortgage as the house only had 69 years on the lease but Woolwich were able to help.

We will be looking to buy the remaining 75% and own the full property.

As said they have said that all renovations would be deducted from the valuation. I really hope so as we have spent at least £15k and the house has gone from £152k to about £180k

jacobtheamish

When you look to purchase, how much will you be looking to borrow?

carnut1234

That all depends on what they value the house at. But I currently I have borrowed £32k as I had a £6250 deposit. I would hope to be buying the house for £156 so I would only need to borrow a further £118k.

blues

I am going through the same procedure at the moment. The work I have done to the property has been taken into account, but they don't deduct the full amount. So, I have spent 10k on a new bathroom & kitchen and the housing association has deducted 5k from the current valuation. Their explanation was that 10k spent on a property adds value but not the full 10k which makes sense,

Hope that helps & good luck

jacobtheamish

So potentially borrowing 160k against a property value of 180k is a 90% LTV.

You would need to use Help to Buy MG with just a 10% deposit, as a standard product would need a min 15% deposit to buy a leasehold property.

Hope that helps

kingstreet

danieljephcott wrote: »

That all depends on what they value the house at. But I currently I have borrowed £32k as I had a £6250 deposit. I would hope to be buying the house for £156 so I would only need to borrow a further £118k.

£150k mortgage on £156k purchase price is 96%.

Are you expecting the lender to take the value, even though that's not the purchase price?

dimbo61

The big question is can you put some of your money IN!
The £15K you have spent on the property might have been better spent on buying 100% of the property with a normal mortgage and £6250+£15,000 deposit.
Too late now but if you can get a bigger deposit !!!