Shared Ownership Mortgage Help!

Anya

We bought a 50%share of a house nearly 6 years ago with a fixed rate endowment mortgage. The tie-in period for that mortgage has finished now and I need to switch, but I don't know the best option now. We could also probably now afford to buy another 25% share. With the increase in the price of the house our half's value has doubled. So... do I stop the endowment and get a completely new mortgage for 75%, do I carry on with the endowment and get another mortgage for 25%. I find all this stuff completely baffling and don't know how it all works? So sorry if I sound really thick - it's coz I am (on these subjects anyway)!!!. Is the extra value on our share of the property - is that equity? -and how can that be used...can I use that to increase the amount that we can borrow on a mortgage. Does anyone know any good shared ownership mortgage providers at the moment? Any advice...please! :P

MarkyMarkD

The mortgage and the endowment are two separate matters.

So taking the mortgage first, you need to redeem the existing mortgage and remortgage with someone else for the whole 75%. This should not be much of a problem given that your equity has increased, although not that many lenders do shared ownership.

As for the endowment, there's no reason to surrender it and start again. This is almost definitely financially bad news, as the set up costs will eat up much of its value. Most people would recommend that you keep the plan going and take out the extra borrowing on a repayment basis - there's no reason why you can't have say £50k interest only and £50k repayment.

Your circumstances probably make it worthwhile talking to a mortgage broker who will know which lenders will be interested in helping you out.

Anya

That makes things a bit clearer - thanks!

Robert_Sterling_3

I agree with MarkMarkd except that I am not clear as to why the remortgage has to be with a new lender.

welnik

what I would also do in your circumstances is take out a life insurance policy (term assurance) to cover the repayment portion of your mortgage. Particularly if you have a family then you know that the house is theirs if anything happens to you.

You dont actually have to move lenders if your happy as they will more than likely let you have additional borrowing to cover what you want to do (providing income is sufficient of course). If you shop around you may find that there are cheaper rates out there which will save you money. Some lenders dont like Shared Ownership though.