Staircasing Shared Ownership To 100% (On BTL Mortgage)

BigAl12

I currently own 60% of a shared ownership property in my sole name, which I brought about 5 years ago. Due to an expanding family and job prospects moving further north, I had to move elsewhere, where I am currently renting privately.

In the interim, I obtained temporary permission from the housing association and the lender, to sublet the property for up to 12 months whilst I considered my options. I now have the property tenanted with a lovely couple who are in work, reliable and paying 145-150% in rent, in relation to the combined mortgage and rent payment that I'm liable for.

The couple want to extend their tenancy, but it is unlikely that the HA or lender will extend their consent to sublet whilst I'm still on the shared ownership scheme. Therefore my only option would be to staircase to 100%, which I am in a position to do financially with some savings I have provided that I can find a lender willing to lend 65-70% LTV of the full property value.

Obviously I cannot obtain a residential mortgage because I am not living at the address, so my only option is a BTL mortgage, which I'm also not eligible for as I do not own the property I am living in currently.

I have found an excellent BTL offer with a high street bank, where the monthly cost of their (repayment) BTL mortgage is less than I'm paying at the moment in mortgage + rent. They require a minimum rental return of 125% on the interest only part of their mortgage, which I am currently smashing at 175%. Their maximum LTV is 75%, and I sneak under that at 70%.

The only problem is the fact that I do not own a property elsewhere, making me a FTB and ineligible for their BTL product unless I apply as a joint applicant with a home owner. My parents (mortgage free on a £300k property) have offered to apply for the product jointly with me, which would make me eligible but I am unsure how this would sit under shared ownership rules.

My questions are:

1) Would my conveyancing solicitor (or anybody else) tell the housing association that the mortgage funds I have secured to staircase to 100% ownership are on a BTL basis, and if so does this give the HA the right to refuse the staircasing application due to it being non-residential?

2) I bought the initial 60% share as a sole mortgage applicant. If there anything that prevents me buying the further 40% from the HA as a joint applicant with somebody who was obviously not listed on the original purchase 5 years ago? In this case it's my parents but it could easily be a new partner etc for other applicants.

3) My conveyancing solicitor declared for stamp duty on 100% of the property value when I brought my initial 60% share, as the whole value fell below the threshold of £125k and therefore cost nothing. The property is now worth well in excess of this....have the rules changed to mean that I would pay stamp duty for staircasing or does the original declaration stay valid?

Thanks in advance!

amnblog

1) All facts will be declared

2) You can put other parties on as part of the re-mortgage process.

3) If you 'covered' the whole stamp LT on initial purchase that should be it dealt with - check with your solicitor

4) Engage a mortgage broker - not owning your own home is not a barrier in itself.

nubbins

"They require a minimum rental return of 125% on the interest only part of their mortgage, which I am currently smashing at 175%. Their maximum LTV is 75%, and I sneak under that at 70%."
One thing to bare in mind is when I got my last mortgage they worked the 125% out on a 5% interest rate (I think) not the 2.3% I was actually paying. I think some lenders base it on up to 7%

http://www.buy-to-let-mortgages-uk.co.uk/natwest_bank_lending_criteria.htm

BigAl12

I noticed that in the small print. I think it's 6% or the product rate, whichever is higher. Drops me down a bit but still over 150% so shouldn't be a problem.

I've managed to get a copy of the staircasing handbook of another housing association that provides shared ownership properties. They state that they only restrict the type of mortgage used (and hence ask to see the terms) if you are staircasing to less than 100%. Purchasers staircasing to 100% can use any mortgage product they wish and they do not require sight of the terms, so BTL is acceptable.

I just hope my (neighbouring) HA have the same rule.