Valuation - am I correct?

James131994

Hi, I am just looking for some confirmation I have calculated the below correctly.

We purchased an initial share in our shared ownership home in March 2019, the house was valued at £317,500. Today, I had a valuation of £305,000 as we are now staircasing... the house is a new build so I was expecting it to drop a bit.

My initial deposit, plus the equity I’ve paid in (not including mortgage interest of course) should be decreased by 3.9% in line with the valuation decrease to show my true equity in the property, is that correct?

I’m just trying to make sure we have a 10% share in the overall property to meet the mortgage criteria and wanted to make sure the equity we have is calculated correctly.

We put £15,875 as a deposit, so I assume this now ~£15,250 in equity plus whatever we have from mortgage payments?

Thanks

Retired_Mortgage_Adviser

What's the o/s mortgage today?


This is how I would do it -

When you took out the mortgage in March 2019 - true equity was 5% (20% of 25% of property value of £317.5k)

Now it would be (random assumption of capital repayment of £13,500 made in the intervening period)
Value of property - £305,000
Outstanding mortgage - £50,000 (£63,500 original o/s mortgage less £13,500 capital repayments)
True equity in the property - 8.6%, £26,250 (25% of 305,000 less o/s mortgage of 50k)

We might possibly end up with the same figures but I just couldn't get my head around the logic you adopted.