Shared Ownership / Remortgaging

JackRH93

Hi, I would be grateful if someone could help with my question. 

I have just bought a larger share of my shared ownership property, I now own 75%. I'd like to buy the final 25% ASAP however due to what banks are willing to lend us, we can't quite afford it yet. 

My question is, we plan to make good mortgage overpayments so in 4-5 years the capital / equity we have in the house will be greater than the 25% share value. Does this essentially mean we can remortgage and use the equity we have built up to buy the final 25% share with no mortgage at the market value and then 'remortgage' our 75% share at the market value? This would essentially mean our mortgage basically 'resets'  but based on the market value at the time of the remortgage. 

Of course I understand house prices could impact the timeline as nobody knows what will happen there but is the general theory correct? 

Thanks for your time
Jack

[Deleted User]

Yep (or that's my understanding!). There's a very good shared ownership broker on here, but in general the principle is correct - if you have enough equity when it comes to staircase/remortgage, you can use that and (potentially) not have to part with any cash at all (apart from all the legal fees etc).

In my situation, I'm putting a lot more than the minimum 5% into the property (as I wasn't sure if I'd be getting shared ownership or a 'normal' house, so I've built my LISA up - and now can't get it back out without losing money!) - when it comes to staircasing, I'd think I'm almost certain to have sufficient equity to jump a good 25% or so (high initial investment + price rises (hopefully!)).

Only thing to be careful of is that as it's re-valued that obviously means the price of your staircasing may be more than you initially paid. From what I've seen locally, shared ownership houses seem to hold their value (/be overpriced!!) more than other 'nearly new' properties (i.e. say < 5 years old), so chances are you'd be paying the same or a premium to staircase - but if you bought a bog standard new build, possibly the value would dip after the first few years.

haras_n0sirrah

Hi. I think I am the shared ownership broker Somerset is referring to (previous name haras_nosirrah but lost the account in the change over)
With staircasing the property is revalued and then at that point in time you buy the shares at the current market value. If you have at least 10% equity of the whole property value you may not need any further money although stamp duty applies to the staircase that takes you over 80% ownership. You do need to be able to borrow enough to fund the difference between the property value and your equity. If you want me to run some numbers let me know (14 years as a shared ownership mortgage specialist)