Can I afford to move on from shared ownership?

AllAboveBoard

Hello,

I had fantastic advice from the forum 9 years ago when I purchased 60% share of £140k house with 100% repayment mortgage of £84k.

House has risen only minimal amount in value - I suspect around £155k now (but haven't had it valued) My remaining mortgage debt is £62.5k.

I remain in the same employment earning £31k pa. New partner earns approx £17k pa but has poor credit history and has no chance of borrowing. (Thankfully I adore that partner! )

I'd really like to move to a property I can hopefully find and afford on the open market......but equally have no savings at present. I am anticipating approx £20k windfall next spring which could be used as a deposit.

Can I realistically plan a move?

Thanks in advance......and please be kind to this rusty old brain

Guest101

Not enough information:


1: Current equity
2: Partners credit history (CCJs/Defaults) and how long ago
3: Area you want to move to
4: Age of you and your partner


In theory you can, but unfortunately it's impossible to say with the limited info you have given.

AllAboveBoard

Thanks Guest101.

1: Current equity? 60% share of £15k? Not a significant amount is it? But I'm thinking as I've paid £22k off mortgage too does this count?
2: Partner's credit history? Hmm this isn't good. Partner currently on Debt Management Plan but will not be debt free for 5 years. Therefore I'd be purchasing alone with Partner contributing towards household costs etc.
3: Happy to remain in local area as it accommodates my commute to work.
4: I have at least another 20 years of working age. Partner is 10 years older.

Guest101

AllAboveBoard wrote: »

Thanks Guest101.

1: Current equity? 60% share of £15k? Not a significant amount is it? But I'm thinking as I've paid £22k off mortgage too does this count? - You've paid £22k Off the mortgage, or you've made £22k of mortgage payments? A lot of lenders now you a 90/10 split with payments, which means the first set of payments pay interest, which then evens out and latter payments pay off more of the actual loan amount.
2: Partner's credit history? Hmm this isn't good. Partner currently on Debt Management Plan but will not be debt free for 5 years. Therefore I'd be purchasing alone with Partner contributing towards household costs etc. - OK, be careful as he/she might get an interest in your property if they pay anything which may constitute a 'rent'.
3: Happy to remain in local area as it accommodates my commute to work. - Sorry, I meant an area so we could judge house prices, but if it's local prices would be similar to the current one.
4: I have at least another 20 years of working age. Partner is 10 years older.

Ok, so mortgages you are realistically looking at 15 year duration, as opposed to 25 years.

AllAboveBoard

Thanks again Guest101

Realistically we'd be looking for something that probably needs a bit of work on. Would be happy to downsize from 3 to 2 beds. Secure garden is more important to us than house size! Pets!!! :rotfl:

So, if I found a property for say £140k and used the anticipated £20k payout as a deposit......if I factored in £9k equity and £22k already paid.....would I need to remortgage for the remaining amount outstanding on my current mortgage plus the additional value of new property? A 15 year mortgage of approx £90k?

Heck, I need to try and get my head around this again.....! Its a little scary how easy it is to blindly just pay up and forget about how it all works......and I'm not even blonde!

Martin would be ashamed of me

Guest101

AllAboveBoard wrote: »

Thanks again Guest101

Realistically we'd be looking for something that probably needs a bit of work on. Would be happy to downsize from 3 to 2 beds. Secure garden is more important to us than house size! Pets!!! :rotfl:- Excellent, so the property price would be comparable.

So, if I found a property for say £140k and used the anticipated £20k payout as a deposit - Leaving £120k......if I factored in £9k equity - Leaving £111k and £22k already paid - This is the bit you're confused with (I think) You've made £22k, however some, or most, of that will be interest. It's not factored in to anything. Equity is the amount of the property which is yours (which would be the current value minus the current outstanding balance) .....would I need to remortgage for the remaining amount outstanding on my current mortgage plus the additional value of new property? A 15 year mortgage of approx £90k? - You wouldn't be 'remortgaging' as this would be a new property. You would need a new mortgage.

Heck, I need to try and get my head around this again.....! Its a little scary how easy it is to blindly just pay up and forget about how it all works......and I'm not even blonde!

Martin would be ashamed of me

I think you're getting confused.





For arguments sake you borrow £100k for 20 years.


The first payment would be (for example £500) £450 towards the interest on the loan and £50 towards the balance.


So after one month you owe £99,950 (but you've paid £500)


Slowly the ratio changes, so after 10 years you will be paying 50/50, (arguments sake it's a fixed payment) now it's £250 for interest and £250 for balance.


At the end you're paying £50 interest and £450 balance.


Does that make sense?

AllAboveBoard

Hmmm thats not so good then is it?

I'd be needing a new mortgage for the £140 minus the £20k deposit and £9k equity? Effectively borrowing £111k over 15 years?

I guess the positive is that even though I would be paying more each month, the property would be mine as opposed to SO with HA.

Guest101

AllAboveBoard wrote: »

Hmmm thats not so good then is it?

I'd be needing a new mortgage for the £140 minus the £20k deposit and £9k equity? Effectively borrowing £111k over 15 years?

I guess the positive is that even though I would be paying more each month, the property would be mine as opposed to SO with HA.

I suppose it depends how much you can sell it for too.

libf

House sells for £155k, of which you receive 60%: £93k. After paying off the £62.5k mortgage you have £30.5k.

New house costs £140k, but you put in your £30.5k, so you need to borrow £110k over your 15 years. If you've got another £20k to put in, then you need to borrow £90k over 15 years. But don't forget legal fees, moving costs and stamp duty...

theartfullodger

AllAboveBoard wrote: »

....I had fantastic advice from the forum 9 years ago when I purchased 60% share of £140k house with 100% repayment mortgage of £84k.

That "£140k" was - if other reports of shared ownership are correct - almost certainly over-valued... sorry so...

House has risen only minimal amount in value - I suspect around £155k now (but haven't had it valued) .......

it probably went up a realistic amount from the realistic genuine value it was (lower than £140k) when you bought it.

Sorry.

AllAboveBoard

Thank you libf - your post helped clear the fog! :T Trying to multitask here and I never was much good at that! But you know how it is when an idea gets in your head and you just NEED to talk it through? That's why I love this forum :beer::beer:

Theartfullodger - not sure I want to say 'thank you' for the reality check (just kidding!) but I was basing my estimation of equity on a neighbour's recent sale of SO property. Hopefully mine will realise a similar (if not better!) value.........fingers and paws crossed!

I really do appreciate all your input. Thank you