Government backed 5% deposit mortgages for shared ownership staircasing?

K_S

@CS_ I fully appreciate where you're coming from. But honestly, as JMA said, you can rest assured that lenders are chomping at the bits to dive into 95%, using the government mortgage guarantee scheme as a backstop. If there is any way they are able to apply the guarantee to re-mortgages, staircasing, etc, trust me they will bend over backwards to offer products!

Having said that, as things stand I don't see it applying to remos and the scenario outlined in your post.

CS_

Ok thank you for these helpful replies - I understand now that lenders see staircasing as remortgaging as opposed to purchasing a new property. So it seems the way forward is to try to get our voices heard on this whilst the scheme is still being finalised ahead of April. So I've written the email below and sent it to my local MP, as well as Rishi Sunak (CEU.enquiries@hmtreasury.gov.uk or rishi.sunak.mp@parliament.uk if a constituent), the Secretary of State for Housing (robert.jenrick.mp@parliament.uk if a constituent and http://forms.communities.gov.uk/), and Martin Lewis' news team (news@moneysavingexpert.com) in the hope that Martin Lewis may bring some attention to this. If anyone feels strongly about helping to campaign for staircasing to be eligible for the Mortgage Guarantee Scheme, perhaps consider contacting them as well?

"My fiance and I were happy to see Rishi Sunak saying on the news that there will be government backed 95% LTV mortgages from April and paused stamp duty. We have a 25% share in a shared ownership flat, and like many of our generation we would love to buy 100%. Our combined income is over 4.5 times the property value which is required to get a mortgage, so we meet income requirements.  

However, we've been trying to raise a deposit to get a full mortgage, and with our bank's current LTVs of 85% have been unsuccessful as we'd need a 15% deposit of over £40K, and the more we save, the higher property prices are rising. We are hoping this scheme will work for us - we have enough saved to pay a 5% deposit so could buy in April. However, our bank said the government guidance on this doesn't say anything about staircasing so we're unlikely to get this mortgage - as apparently lenders tend to classify staircasing as 'remortgaging', as opposed to a new purchase. It seems to us like a purchase, as we'd be buying the 75% share from the housing association and usually stamp duty applies as with any other home purchase.

Martin Lewis's website says this is for all people with a low deposit if you meet the criteria. We meet all of the criteria given on the gov.uk page with details about this scheme. We're purchasing a main residence, under £600K value etc. But unless there's clarity to tell the banks that this scheme is OK for staircasing in a shared ownership flat, I'm getting the impression we will fall into a grey area.

It seems like this scheme is to help people in our position, so I really hope we will be eligible. Could someone please ask the relevant section of government on our behalf to be more specific about staircasing in the guidelines for this scheme? We have 5% deposit, the required income etc and would love to go for this as soon as it's out in April. If staircasing is ineligible, we could instead consider purchasing a new flat at the same value as our current one so that it would be eligible for the Mortgage Guarantee Scheme - but we are very happy where we live just now and would love to just staircase here if possible."

K_S

@cs_ Definitely worth a shot, all the best and good luck!

lonibra

Another problem is you have a flat. Lot of big banks aren't willing to give 10% deposit mortgages in flats now, I don't think they will start giving 5% deposit mortgages for flats even with the government subsidy. Wait and see.

CS_

As well as emailing our MPs, the housing secretary etc - it may also be useful if anyone affected by this emails shared ownership schemes like Share To Buy so that they are aware of the crack it's looking like SO people will fall through for this scheme.