Co-ownership stair

blinkmck

Has anybody any experience off adding to their mortgage to staircase in a Co-ownership property in Northern Ireland?

Have 50% share in a property and looking to add to my equity to around 80-90% at the minute. Currently in a fixed rate mortgage with Ulster bank that ends in December. House was about for 114.5k for which I took a 57.25k mortgage. House prices had gone down slightly but are now starting to rise so I'm hoping to take advantage of this and the lower interest rates so I can gain more equity equity without having to pay out more each month. I haven't got a equity valuation yet but would estimate that the equity value would be around 105-110k, with market value be slightly more as I've made some improvements such as a new kitchen. Had a quick chat with Ulster bank mortgage advisor with some rough figures and should be doable in principle.
Do I add now or wait a few months until November when the current mortgage term runs out, so the terms of current mortgage and any subsequent sub-account mortgage are the same, and I am not stung by 2 possible early repayment charges if I want to re-mortgage in the future?

At the same time, house prices in NI are starting to see an increase again with a 14% increase being announced this morning, so the equity value could go up more by November.

Sorry for such a long post

saverbuyer

blinkmck wrote: »

Has anybody any experience off adding to their mortgage to staircase in a Co-ownership property in Northern Ireland?

Have 50% share in a property and looking to add to my equity to around 80-90% at the minute. Currently in a fixed rate mortgage with Ulster bank that ends in December. House was about for 114.5k for which I took a 57.25k mortgage. House prices had gone down slightly but are now starting to rise so I'm hoping to take advantage of this and the lower interest rates so I can gain more equity equity without having to pay out more each month. I haven't got a equity valuation yet but would estimate that the equity value would be around 105-110k, with market value be slightly more as I've made some improvements such as a new kitchen. Had a quick chat with Ulster bank mortgage advisor with some rough figures and should be doable in principle.
Do I add now or wait a few months until November when the current mortgage term runs out, so the terms of current mortgage and any subsequent sub-account mortgage are the same, and I am not stung by 2 possible early repayment charges if I want to re-mortgage in the future?

At the same time, house prices in NI are starting to see an increase again with a 14% increase being announced this morning, so the equity value could go up more by November.

Sorry for such a long post

If the house isn't in greater Belfast it's unlikely you've seen or indeed will see dramatic price increases in NI.


Best to buy your equity before prices go up. Co-ownership will adsorb half the negative equity.

blinkmck

The house is in greater Belfast, and as you say looking to buy more Equity now so that Co-ownership absorb any fall in value. Just don't know whether to go for it now, or wait until my current fixed term runs out?

Just thinking for prob another couple of years down the line, where I will be in position to but out the remaining 10%, and looking to shop around for better mortgages rates, would it be more complicated by having the main mortgage and sub-account mortgage with the fixed rates running out at different times?

saverbuyer

blinkmck wrote: »

The house is in greater Belfast, and as you say looking to buy more Equity now so that Co-ownership absorb any fall in value. Just don't know whether to go for it now, or wait until my current fixed term runs out?

Just thinking for prob another couple of years down the line, where I will be in position to but out the remaining 10%, and looking to shop around for better mortgages rates, would it be more complicated by having the main mortgage and sub-account mortgage with the fixed rates running out at different times?

I would only staircase up to full value to be honest. You really don't want to be paying valuation and solicitor fees twice for such a small equity cost.


You'll need a 10% deposit to get a 90% LTV mortgage and earning around 25k.


Ulster bank only offer co-ownership mortgages at 85% LTV and below.

blinkmck

They offer 85% for new customers but up to 90% for existing co-ownership mortgage holders. Got some documentation from ulsterbank saying they use the co-ownership valuation as the guideline, which only costs £40, and spoke to co-ownership on the phone and there is no legal fee's their end until I'm going up to 100%. Would just have to pay any ulster bank fees. I think having 90% onwership rather 50%, on any future property value rises would outweigh any fees. Based on what i'm paying out on mortgage and co-ownership rent, I would be possibly paying a little bit extra a month overall as a result (about £40-50). Would it be better to go through mortgage advisor and go deal directly with the bank themselves?

saverbuyer

If the broker isn't going to charge you a fee I'd stick with them.


Do you have a 5 or 10% deposit?

blinkmck

Not at the minute, and prob won't have the savings for that until next year. Credit card to clear first (wedding and honeymoon last year)

But if hypothetically the house was valued at 110k, I would need to borrow 44k to take another 40% equity bringing me up to 90% ownership. With around 53K currently remaining on existing mortgage this gives total mortgage of around 97K which would be about 88% LTV. If within the year I reduce the mortgage through normal payments to about 94K, and any increase in value would decrease the LTV even more. Even an an increase to 115K after 12 months would bring the LTV down to about 81.7%. I would also be in a position to have some savings as well then, so would possibly be looking at other providers to switch mortgage with a view of buying out the rest with a combination of saving and borrowings a little more, and getting a better rate elsewhere.

Again, even that plan would see no major increase on what I'm paying out each month, but would mean I would gain a lot more from any potential house price increases.

TrickyDicky101

I have no clue as to how coownership operates in NI - is the LTV based on the total property value or just on the value of the portion of the property you own (ie 90%)?

I ask because £97k mortgage on 90% of £110k is effect tively 100% LTV in traditional English mortgage calculation.

blinkmck

They base it on the property value based on the document ulster bank gave me

saverbuyer

blinkmck wrote: »

Not at the minute, and prob won't have the savings for that until next year. Credit card to clear first (wedding and honeymoon last year)

But if hypothetically the house was valued at 110k, I would need to borrow 44k to take another 40% equity bringing me up to 90% ownership. With around 53K currently remaining on existing mortgage this gives total mortgage of around 97K which would be about 88% LTV. If within the year I reduce the mortgage through normal payments to about 94K, and any increase in value would decrease the LTV even more. Even an an increase to 115K after 12 months would bring the LTV down to about 81.7%. I would also be in a position to have some savings as well then, so would possibly be looking at other providers to switch mortgage with a view of buying out the rest with a combination of saving and borrowings a little more, and getting a better rate elsewhere.

Again, even that plan would see no major increase on what I'm paying out each month, but would mean I would gain a lot more from any potential house price increases.

But don't you need a deposit at any LTV over 75%?


So 80% LTV = 5% deposit 15% Coownership share.


So next year,


Value 110k, your share 53k owed (55k value) for 50%
CO 55k value. 40% cost = 44k.


New CO 10% share value = 11k


Mortgage = 97k + CO value 11k.


Total = 108K on 110K house.

saverbuyer

TrickyDicky101 wrote: »

I have no clue as to how coownership operates in NI - is the LTV based on the total property value or just on the value of the portion of the property you own (ie 90%)?

I ask because £97k mortgage on 90% of £110k is effect tively 100% LTV in traditional English mortgage calculation.

You rent the 10% equity co-ownership own but at a subsidised rate of around 2.5%.


Similar to a HTB equity loan but with interest for the beginning.