Staircasing and remortgage

cmbrookes

Hello

can anyone explain to me how staircasing would work with remortgaging in shared ownership. So if I have a 30% share in a house at 260k and I have a 10k deposit so I’d need a mortgage of 68k. Let’s say over 5 years I pay off 20k of this mortgage and I want to increase my share to 50% and remortgage. Can anyone tell me the process and how it works at this point please?

simon_or

I've helped my brother with this, the HA was L&Q

- apply to HA

- get RICS valuation and instruct solicitors

- HA sends memo of staircasing to solicitors

- apply for further advance or remortgage

- conveyancing and completion

I think that's the order of events but it may be a bit mixed up.

Lots of costs involved and the valuation needs to be renewed if you haven't completed in 3 months.

Before embarking on all this, do confirm with your bank or broker that you can get what you want.

cmbrookes

Thanks for that. I was told then when I come to remortgage, what ever I’ve paid off previously, say 20k has been paid off, this will act as a deposit for when I remortgage. Does this mean that after revaluation, if I need to borrow another 50k then I would only need 30k? Or does the 20k just get deducted from the original amount borrowed? I’m not fully following what is meant when they say what ever has been paid off acts as a deposit.

simon_or

Started off with 260k value, 30% share (78k), 10k deposit/equity and 68k mortgage.

After 5 years - assume value is unchanged (260k), 30% share (78k), 10k+20k equity and 48k mortgage.

You want to staircase to 50% (130k) and have 30k equity, so you need a mortgage for 100k.

If you assume that your value has gone up to 300k, then the numbers change.

- you own a share worth 90k (30% of 300k) of which 48k is the mortgage and 42k is your equity.

- to staircase to 50% (150k), you have 42k equity so you need a mortgage of 108k.

Hopefully I've got the numbers right. Does that help at all?

cmbrookes

Yes that did help thanks for taking the time to explain that. It's all a bit confusing for someone new to shared ownership and staircasing but I think I get the gist of it. So as the house value increases, so does the value of my original equity and deposit and that would act as my deposit when remortgaging?

K_S

cmbrookes said:

Yes that did help thanks for taking the time to explain that. It's all a bit confusing for someone new to shared ownership and staircasing but I think I get the gist of it. So as the house value increases, so does the value of my original equity and deposit and that would act as my deposit when remortgaging?

@cmbrookes The things that make up your "equity" when it comes to a remortgage -

- the original deposit that you put in

- the capital that you have repaid since you took out the mortgage (essentially your original mortgage size minus current mortgage outstanding)

- your share (30%) of any increase in the value of the house