Shared Ownership - Staircasing

Hannie2805

Hi,

I currently own 25% of a shared ownership property and would like to staircase up to 100% - I bought this 5 years ago.

I was informed by the shared ownership team that when i do decide to staircase, a deposit will not be required however stamp duty may be required to pay.

I have contacted my mortgage lender (Halifax) to ask them the process of staircasing works and they have informed me that they only lend 80% of what the share you are purchasing.

So, my flat is worth 220k, if i purchase an additional 75% = 165k extra mortgage required and they have told me I will need a cash deposit of 33k (80% = 132k)

Has anyone on this site staircased via shared ownership? If yes, did you have to put down a cash deposit against the mortgage?

Any advice would be appreciated as I feel as if I have been mislead here.

Thanks
Hannah

OneEngland

Hi Hannah, I have arranged remortgages for clients stair-casing to 100%, you will find that Loan to value limits will apply. If Halifax have said max ltv is 80% then you need to make up the shortfall. There are other lenders who will go above 80%, Halifax will go to 90% but I'm assuming your home may still fall into the new build category (less than 2 years old).
If you do want to considering remortgaging to a new lender, you need to check if any early repayment charges apply.

Hannie2805

Thanks. The property is nearly 5years old so would this be classed as a new build? Would they not be able to use the flats 'equity' as the deposit? We bought the flat for 210k - the share we purchased was 25% = a mortgage of 52500 and have an outstanding mortgage of approx 44k. The flat has been valued at 220k?

Thanks
Hannah

Mortgage_Mark_2

Hannie2805 wrote: »

Thanks. The property is nearly 5years old so would this be classed as a new build? Would they not be able to use the flats 'equity' as the deposit? We bought the flat for 210k - the share we purchased was 25% = a mortgage of 52500 and have an outstanding mortgage of approx 44k. The flat has been valued at 220k?

Thanks
Hannah

The problem is, your share of that equity is 25% - they will take this into account, but otherwise whoever owns the other 75% will be 'gifting' this to you.

kingstreet

Forget the existing mortgage, share etc.

The maximum mortgage you'll get is 90% of the £220,000 value. That means £22,000 deposit and £198,000 mortgage.

At present, you own £11,000 of your home and would therefore need to find £11,000 on top, so you could proceed with a new 90% mortgage with another lender.

If you've lived there five years, I don't know why Halifax is quoting 80%?!

If you paid no stamp duty when you purchased your initial share (solicitor could have made market value election at time) you will now pay stamp duty on the amount you are paying now;-

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm#5

OneEngland

Hannie2805 wrote: »

Thanks. The property is nearly 5years old so would this be classed as a new build? Would they not be able to use the flats 'equity' as the deposit? We bought the flat for 210k - the share we purchased was 25% = a mortgage of 52500 and have an outstanding mortgage of approx 44k. The flat has been valued at 220k?

Thanks
Hannah

Ok so your looking to borrow £209,000 (165k for 75% plus current mortgage of £44,000) against a value of £220,000 which is 95%.
Halifax will not provide a remortgage at that 95%.
You would need to look at a different lender I'm afraid