Remortgage to a Buy-To-Let

gazfocus

A bit of background...

I purchased a shared ownership house about 18 months ago in my name only and the mortgage is via Leeds BS.

Since then, my wife and I's circumstances have changed and we got a temporary consent to let from the housing association and also consent to let from Leeds BS and this enabled us to buy a bigger house with a new mortgage with a different lender.

I want to remortgage the shared ownership house and buy out the rest of the property and have received the valuation from the housing association for their share. This doesn't take into account improvements we made such as new kitchen, large conservatory, levelling and extending the garden, etc.

So, my question is, how can I remortgage the house at its true value whilst buying the other 50% off the housing association at the price they've asked for in order to use any equity I've created towards the 25% deposit I need to raise?

Jenniefour

What leads you to believe the Housing Association have undervalued the property? You could always get your own valuation done to check it.

It looks like the difficulty here is that you don't have the required 25% equity needed for a BTL mortgage.

gazfocus

Jenniefour wrote: »

What leads you to believe the Housing Association have undervalued the property?

Because when the housing association valued the house they specifically stated that they don't take into account any improvements I've made to the house (such as a 5x3m conservatory, brand new kitchen, extending the garden, etc). They asked for a list of what I had done to the property and these parts were 'ignored' by the valuer.

Jenniefour wrote: »

You could always get your own valuation done to check it.

We've already paid for the Housing Associaton to do a valuation and will need to pay for another one for the BTL mortgage so don't want to pay for a 3rd one if we can help it.

Jenniefour wrote: »

It looks like the difficulty here is that you don't have the required 25% equity needed for a BTL mortgage.

Not at all, but if there's equity in the house we can either get a better rate by having a lower LTV or we can use the equity in the house towards the deposit and have the extra cash in our pockets.

Jenniefour

OK, so you'd like to be able to get a better rate, and get some of the equity out of the BTL. You won't know this until you get your mortgage sorted out and the valuation is done by the lender - although I can't see any reason why the HA valuation would be inaccurate.

For a property you've owned for only 18 months and taking into account folks rarely get their money back on improvements (unless the place was a shocking wreck to start off with, unlikely from your original post) the HA valuation is most likely accurate. Wouldn't be in their interests to undervalue as they'd be getting less for the sale of their share. So it's more likely that the valuer ignored the improvements because they don't make a difference, not because he/she deliberately undervalued.

silvercar

Jenniefour wrote: »

OK, so you'd like to be able to get a better rate, and get some of the equity out of the BTL. You won't know this until you get your mortgage sorted out and the valuation is done by the lender - although I can't see any reason why the HA valuation would be inaccurate.

For a property you've owned for only 18 months and taking into account folks rarely get their money back on improvements (unless the place was a shocking wreck to start off with, unlikely from your original post) the HA valuation is most likely accurate. Wouldn't be in their interests to undervalue as they'd be getting less for the sale of their share. So it's more likely that the valuer ignored the improvements because they don't make a difference, not because he/she deliberately undervalued.

Shared ownership is a bit different. OP owned his share of the property and paid for all the extras. So his 50% share of the original property say, may equal 60% of the property with the extension and other things. So they are not undervaluing the total but looking at a value for the share they own of the original property.

Jenniefour

Thanks. So when HA did the valuation they had to discount improvements for the share they are selling because they were all paid for by OP - and OP is only one allowed to benefit.

So OP may well get a better rate for the BTL mortgage.

kingstreet

A BTL remortgage on a former shared ownership property?

Is there a lender that will do that? It's hard enough to get lenders to staircase to 100% on a residential, never mind BTL lending after it's done.

gazfocus

kingstreet wrote: »

A BTL remortgage on a former shared ownership property?

Is there a lender that will do that? It's hard enough to get lenders to staircase to 100% on a residential, never mind BTL lending after it's done.

My mortgage advisor didn't seem to think it's an issue when buying our new house. What makes you think it'd be difficult? Why would it be any different than buying a house on the open market as I will technically be buying 100% of the house with a BTL mortgage.

de1amo

This has echoes of the threads that used to go on while people were fueling the bubble......i do hope they are giving lots of money out....

leveller2911

Another chancer trying to make a killing out of shared ownership.....

Quote: "Since then, my wife and I's circumstances have changed".

You now have 2 wages coming in and can't be @rsed to save up a bigger deposit for your "forever home" or sell your Shared ownersip house first.

Typical "I want it now syndrome".

This is the reason that keeps cropping up on these threads as a reason to rent out the house.

Shared ownership schemes along with HTB were always open to abuse and this is yet another case of someone abusing the system. They were designed to help people get on the housing ladder who can't afford to buy 100% of a property and not for your property empire.

Heres a novel idea, sell the shared ownership instead of trying to build a property empire on the cheap.

lou2003uk

I had similar circumstances so thought I'd put my story forward see if it helps you.

I had shared equity with housing association 80/20 split. My circs also changed better wage and met partner when we bought our current property to live in I bought the housing association out and got permission to let of my lender rather than a buy to let.

House was purchased 2007 for 110k new build. 80/20 split.

House was them valued 2011 by HA appointed valued ( which I had to pay for) for 94k not including any extras I had done. I had to pay HA legal and survey fees but bought them out 20% of the 94k and that was it.