Staircasing on shared ownership query

lizzyjm

Hi,

I'm hopefully in a position to buy more shares in the shared ownership flat I purchased 25% of 4 years ago. My question is this: is it better to buy a larger proportion of shares with a smaller mortgage deposit, or a smaller proportion of shares with a larger mortgage deposit?

For instance, would it be better to:

a) purchase a further 25% of the property with a 20% deposit on that, or
b) purchase a further 50% of the property with just a 10% deposit?

Or should I wait a few more years until I have saved up more money? I live in London and I've heard that house prices are set to carry on rising.

Mandog

It's hard to comment on so little information. A lot depends on the security of your job and how stretched you will be in paying your monthly outgoings.

I'm sure you're right to staircase if you can comfortably and safely do it as 25% is too small a share to justify the extra costs and hassles of being an owner rather than just a tenant. Like you I started at 25% but bought more within a few years.

However owning 75% is a bit risky. If you decide to sell, who will buy 3/4 of a flat rather than 100% of a slightly cheaper one? But if your ambition is to own 100% eventually and you're sure your circumstances won't change, it might make sense for you.

Also consider the relative costs of renting vs the mortgage. Is your rent a bit of a bargain? A subsidised rent is a rare and precious thing. On the other hand, you might be able to get a low interest rate and fix it for a few years, making buying more affordable.

Best of luck with whatever you go for.