Shared Ownership Staircasing- HA valuation vs Mortgage Valuation

Newbie89

Hi 

Looking for some knowledge as I can't work this out myself.

I'm looking to staircase to 100% ownership of my property. The RICS valuation came in a bit lower than expected, which is good tbh.

Bur what happens in the instance that the valuation provided by the RICS valuer for the Staircasing premium is less than the bank's valuation.

I realise this means a larger mortgage, but what happens with the transfer of cash to the Housing Association for their premium for the remaining share?  I assume they get given the value of the premium based on the RICS valuation, but what happens to the difference?   

So an example:

I own a 50% share currently.
-RICS valuation = £200K. Staircasing Premium is therefore £100K
-Mortgage Valuation = £220K

Who would get the extra £10K based on the mortgage valuation? (as I would own £110K (considering any existing mortgage) based on this but the staircase premium is only 100K)

eddddy

Newbie89 said:

So an example:

I own a 50% share currently.
-RICS valuation = £200K. Staircasing Premium is therefore £100K
-Mortgage Valuation = £220K

Who would get the extra £10K based on the mortgage valuation? (as I would own £110K (considering any existing mortgage) based on this but the staircase premium is only 100K)

It sounds like you're confusing yourself a bit.

In simple terms, you will pay £100k and you will own 100% of a property.

If you then decide to sell it, it might sell for £220k or £200k or £230k or £190k or some other amount.

(If the mortgage lender's valuer is right - it might sell for £220k. If the RICS valuer is right - it might sell for £200k.)

After paying off your mortgage you would get whatever is left.




Or perhaps what you're really wondering is.... you originally thought the property would be valued at £200k, but the mortgage lender has valued it at £220k - so can you borrow a larger amount? Is that your question?

housebuyer143

Newbie89 said:

Hi 

Looking for some knowledge as I can't work this out myself.

I'm looking to staircase to 100% ownership of my property. The RICS valuation came in a bit lower than expected, which is good tbh.

Bur what happens in the instance that the valuation provided by the RICS valuer for the Staircasing premium is less than the bank's valuation.

I realise this means a larger mortgage, but what happens with the transfer of cash to the Housing Association for their premium for the remaining share?  I assume they get given the value of the premium based on the RICS valuation, but what happens to the difference?   

So an example:

I own a 50% share currently.
-RICS valuation = £200K. Staircasing Premium is therefore £100K
-Mortgage Valuation = £220K

Who would get the extra £10K based on the mortgage valuation? (as I would own £110K (considering any existing mortgage) based on this but the staircase premium is only 100K)

That's not how it works. You want £100k, the bank will give you £100k even if they valued it more than £200k.

WYSPECIAL

The lender only values the property to make a decision on the risk of lending you what you have asked to borrow.

The less you want to borrow the lower their risk as If you default they would ultimately be able to repossess and sell to recoup their money

Newbie89

WYSPECIAL said:

The lender only values the property to make a decision on the risk of lending you what you have asked to borrow.

The less you want to borrow the lower their risk as If you default they would ultimately be able to repossess and sell to recoup their money

Thanks this is the explanation I needed!

So the only real risk for me is actually if the bank values the property at less than the RICS valuation as I wouldn't be able to get a big enough mortgage to cover the premium to staircase. 

housebuyer143

Newbie89 said:

WYSPECIAL said:

The lender only values the property to make a decision on the risk of lending you what you have asked to borrow.

The less you want to borrow the lower their risk as If you default they would ultimately be able to repossess and sell to recoup their money

Thanks this is the explanation I needed!

So the only real risk for me is actually if the bank values the property at less than the RICS valuation as I wouldn't be able to get a big enough mortgage to cover the premium to staircase. 

Yes, that's exactly right. At which point I would take that RICS valuation to the HA and try to negotiate.