Please help! Shared Ownership / Remortgage

James131994

Hi, 
Here is my situation: 
We bought 75% (initial 25% and then a further 50%) of our shared ownership property, now we would like to buy the final 25% but I can't seem to understand the whole thing and 2 brokers have told me opposite info which I just don't understand. I wanted to do the whole thing without putting any money down other than fee's and solicitors etc. 
Current FULL house value £338k
Our 75% share value £253k
Current total Mortgage balance £169k 
I believe that gives us £84k equity and the final share is £85k to buy - is this correct?

What I would like to do is either borrow more from our existing lender as our initial mortgage balance was £206k and we have paid this down to £169k through standard payments and overpayments so there must be some room to borrow more, also they would have lent us a bit more than £206k in the first place. 
If the current lender is not suitable or will not lend enough my understanding is that we remortgage which takes the £84k equity and use this to get essentially buy the 25% while getting a new mortgage on the 75% at the current market value (£253k) all at the same time in one transaction which should now be affordable due to the extra equity we have. 

The remortgage is my preference but one broker said fine, no problem you need a 75% LTV mortgage and the other said not possible as we would need a 100% mortgage - I just don't get this and he has not come back to me to explain so maybe I am missing something... 

Thanks for your help, this is driving me mad so really appreciate any comments. 

kingstreet

100% share is £338,000. Your equity is £84,000. You need a mortgage of £254,000, a LTV of 75%. You will probably get better rates on the mortgage by remortgaging to a new lender, rather than by additional borrowing from existing lender. You will need to meet affordability for the mortgage either way. Don't forget SDLT unless you earlier made a market value election.

James131994

Thanks Kingstreet. Exactly as I thought and good to hear someone that knows what they’re talking about confirm that. No idea what the other broker was talking about saying it would be a 100% mortgage then. 

Stamp duty was all paid up when we bought our initial shared based on market value so nothing to pay there. 

Thanks again 
James 

haras_n0sirrah

I am a shared ownership mortgage specialist so do a lot of staircasing applications.
It is as king street says. The easiest way to work it out is calculate 25% of the new value and add that to your mortgage. 338 x 25% = 84,500. Add that to current mortgage of 169,000 = 253500 and if using equity to pay solicitors etc then add onto the mortgage to get your final figure (prob need to allow about 1500 for costs)
Existing lenders sometimes charge more for additional borrowing. Are you tied into a fixed rate?