Re-mortgaging for dummies - Shared Ownership

elx825dh

Hello,

long-time reader, first-time poster.

I bought my first flat 2 years ago and the 2yr FR mortgage deal has just ended.
When I bought I used a shared ownership scheme in London.

Whilst shopping around for my new mortgage, my survey report says the value of the property has increased around 6.5%. Now, whilst I'm looking to get the new mortgage arranged, I also want to "final staircase" - which (for those of you not-so in the know) is the process of buying the final shares in the property so I become 100% owner rather than say 50% owner.
I've also been advised that if I use the equity in the property to contribute to the 100% ownership with my new mortgage, I'm still left with a sum of money that I can either overpay or put into my bank account.

In short, I'm a little confused as to what the true benefit of over-paying is and the benefit behind putting it straight back into my mortgage repaayment; I get that it means I can, over a a number of years,reduce the life span of my mortgage - but does it also mean I can call on this cash later down the line, say if I ever came in to an emergency?
Are there any other blindingly obvious benefits I'm missing? Sorry to sound daft, I just can't get my head around the mechanics of it all and the true pros and cons...

Thanks in advance:beer:

rtho782

Just get a a smaller mortgage, surely?

NOVAMET21

elx825dh wrote: »

Hello,

long-time reader, first-time poster.

I bought my first flat 2 years ago and the 2yr FR mortgage deal has just ended.
When I bought I used a shared ownership scheme in London.

Whilst shopping around for my new mortgage, my survey report says the value of the property has increased around 6.5%. Now, whilst I'm looking to get the new mortgage arranged, I also want to "final staircase" - which (for those of you not-so in the know) is the process of buying the final shares in the property so I become 100% owner rather than say 50% owner.
I've also been advised that if I use the equity in the property to contribute to the 100% ownership with my new mortgage, I'm still left with a sum of money that I can either overpay or put into my bank account.

In short, I'm a little confused as to what the true benefit of over-paying is and the benefit behind putting it straight back into my mortgage repaayment; I get that it means I can, over a a number of years,reduce the life span of my mortgage - but does it also mean I can call on this cash later down the line, say if I ever came in to an emergency?
Are there any other blindingly obvious benefits I'm missing? Sorry to sound daft, I just can't get my head around the mechanics of it all and the true pros and cons...

Thanks in advance:beer:

Have you out of a sudden got lots of cash to buy 100% share?


Or has you income increased significantly?

muhandis

Assuming I've understood your question correctly..

1. If you put any spare cash you have into overpaying your mortgage it reduces the capital you owe and thus reduces the interest you're paying on the mortgage. This can either result in your monthly payment staying the same while the term reduces OR the term remains static and the monthly payment shrinks.

2. Unless it's an offset mortgage (or offers special features like an 'overpayment reserve' that you can draw on), once you put money into your mortgage you can't withdraw it easily in case of an emergency or immediate requirement of cash.

elx825dh wrote: »

In short, I'm a little confused as to what the true benefit of over-paying is and the benefit behind putting it straight back into my mortgage repaayment; I get that it means I can, over a a number of years,reduce the life span of my mortgage - but does it also mean I can call on this cash later down the line, say if I ever came in to an emergency?