How do you afford to staircase on shared ownership

Cakeguts

Do what I did. Move jobs to a cheaper area.

antares_47

getmore4less said:

... There are other variations but the limiting factor is based on the interest only model(it takes forever to buy)
Anyway starting point for £260k, if you could borrow all interest only of it at say 2.5% that would be £542pm, if you can afford more than that then you are on the path to owning.
... What is key at the start is what the rent is for the share you don't own as a % against lending rates if it is below or close to lending rates then ok if more then it is not such a good deal.

sorry to be late to the discussion but I would like to as few more things related to the topic, must admit extremely interesting topic and the angle it is approached at in particular @getmore4less, if you don't mind.
As I have highlighted in your Quotation, what exactly are you referring to as the interest only to borrow please?
And are you able to help, as to where the lending rates can be calculated or worked out from? I guess it can be worked out based on the value of the remainder of the shares, that I don't own and amount of the rent paid p/m?

Lastly, I wonder, whether staircasing done using savings isn't 'cheaper' than to do it through mortgage? The reason being why I am tending to think that is that I find mortgage rates shockingly high, for illustration, I purchased 30% share of the 370k SO property for 111k, where on my current mortgage for every £1 borrowed I will pay back £1.75!! So if theoretically I was to save up lump sums over 5 or 10 years to buy more shares in the future direct (cash), wouldn't this be a considerably better option than extending my mortgage each time I want to staircase? And overall it would decrease my rent too as another strategic benefit, isn't?
Thank you in advance for your answers.

getmore4less

antares_47 said:

getmore4less said:

... There are other variations but the limiting factor is based on the interest only model(it takes forever to buy)
Anyway starting point for £260k, if you could borrow all interest only of it at say 2.5% that would be £542pm, if you can afford more than that then you are on the path to owning.
... What is key at the start is what the rent is for the share you don't own as a % against lending rates if it is below or close to lending rates then ok if more then it is not such a good deal.

sorry to be late to the discussion but I would like to as few more things related to the topic, must admit extremely interesting topic and the angle it is approached at in particular @getmore4less, if you don't mind.
As I have highlighted in your Quotation, what exactly are you referring to as the interest only to borrow please?
And are you able to help, as to where the lending rates can be calculated or worked out from? I guess it can be worked out based on the value of the remainder of the shares, that I don't own and amount of the rent paid p/m?

Lastly, I wonder, whether staircasing done using savings isn't 'cheaper' than to do it through mortgage? The reason being why I am tending to think that is that I find mortgage rates shockingly high, for illustration, I purchased 30% share of the 370k SO property for 111k, where on my current mortgage for every £1 borrowed I will pay back £1.75!! So if theoretically I was to save up lump sums over 5 or 10 years to buy more shares in the future direct (cash), wouldn't this be a considerably better option than extending my mortgage each time I want to staircase? And overall it would decrease my rent too as another strategic benefit, isn't?
Thank you in advance for your answers.

the interest only model is renting the money, as that is the equivalent of what you are doing for the share you don't own you rent it.
you get a better comparison to the relative value/cost. of that bit rented or bought with a mortgage
you won't get an interest only but the extra cost for the repayment mortgage is saving/creating equity.

Lending rate is mortgage rate,  it can get slightly more complicated if you buy an extra bit and the rate goes up due to higher LTV you have to factor that cost in as well. 

 savings V buying  that's the number crunch using the rent and the rates  no need to wonder you can work it out.

REMEMBER you have hte biggest unknown of whats that share worth in X years time, general expectation is it will cost more rather than less longer term.

£1  costing £1.75 is not a good measure what is the interest rate and the term?
although £1.75 suggests a high rate and a long term  eg ~3.5% over ~35years

The costs of renting the money now against the rent charge over the period you would need to save is what you look at

Stick up the rest of your numbers for your mortgage and shared ownership can help with a calculation.

IN many cases it comes down to being able to afford the mortgage costs and unless something has changed like pay rises it does not happen because if it had been affordable in the first shared ownership may not have been the choice.