Staircasing (shared ownership) borrowing

Sandyra

Can someone help me at all please? I'm so confused and the Barclays advisor was no help. I bought my £277,500 flat last year and own 35% share and paid £16k deposit. My current mortgage is £79k. I want to staircase to 75% but they are saying the best I can get is 20% even with a pay rise of £10k??? My property has been valued at £315,000. If I only need an extra 40% of £315,000 which is £126,000 on top of my 79,000 is £205k. The loan to value is 65%??? Surely I could get a mortgage increase based on that? Plus do they not take into account the £13,125 equity I've made on the property so far.

alchemist.1

You're obsessing about LTV ratios rather than mentioning the most relevant part which is your salary.
Affordability will take into account the proportion of rent you have to pay too.

Lunchbox

The loan to value is 87% - you can't take into account the part you don't own, only the mortgaged share (i.e. £205k of £236250), this is taking into account the equity. The rent and service charge you'll continue to pay on the unowned share will also reduce your affordability.

Sandyra

Thank you that makes more sense on the LTV. So I'm guessing the LTV for shared ownership is lower to account for rent and service charge but if my mortgage share goes up the service charge and rent goes down. My rent and service charge has in fact gone down by £100 for this financial year.

I'm stuck in a rut as my boyfriend pays half of it all, but I'm aware that I can't account this as income as he is not on the mortgage and we will want to a buy a property further down the line and use help to buy and the ISA which he needs to be a first time buyer.

Lunchbox

Sandyra wrote: »

Thank you that makes more sense on the LTV. So I'm guessing the LTV for shared ownership is lower to account for rent and service charge but if my mortgage share goes up the service charge and rent goes down. My rent and service charge has in fact gone down by £100 for this financial year.

I'm stuck in a rut as my boyfriend pays half of it all, but I'm aware that I can't account this as income as he is not on the mortgage and we will want to a buy a property further down the line and use help to buy and the ISA which he needs to be a first time buyer.

No, these are two separate issues. The loan to value is the proportion of the property mortgaged vs. its total value. In this case the 'total value' is that of the share of the property you are purchasing, i.e. 75% of £315,000. LTV primarily affects what mortgage products are available to you.

The rent and service charge affect affordability, i.e. How much they think you can pay back each month and how many salary multiples you can borrow. Your service charge will not go down when you purchase further shares, only your rent.

I think it would be wise for you to speak to a mortgage advisor who specialises in shared ownership products, as it sounds like you might need more help than a high street lender can give you.