Shared ownership staircasing question

Jackson6 · 18 January 2019 at 3:06PM

(Firstly, apologies if the following query has been answered elsewhere; I did a quick search for 'shared ownership' threads in this forum and couldn't find anything). My question:

I am a shared ownership leaseholder and have paid off the mortgages on a 75% share of the property (first took out a 50% share 20 years ago, paid off, then later on 'staircased' another 25%, also paid off). So I am currently just paying rent and service charge.

If I took out a mortgage for the remaining 25% and was unfortunate enough (for example, through ill-health, or redundancy) to default on that mortgage, would the building society be able to repossess the entire property? Or do I safely own the 75%?

Thanks in advance for any advice!

LRmortgage · 18 January 2019 at 10:59PM

They would be able to repossess the whole property. As when you take out a mortgage (without shared ownership) the lender will take a charge over the whole property.
If this did happen and the mortgage was only for 25% of the value of the property, once the lender had sold the property, paid themselves back what you owed plus interest, fees, selling costs, legal costs etc they would probably still owe you some money from the proceeds which you would be entitled to.

LRmortgage · 18 January 2019 at 11:00PM

By the way, you can take out insurance to cover ill health, redundancy etc

Jackson6 · 19 January 2019 at 3:04PM

Thanks for your replies, very helpful. This is what I feared, that a BS could repossess the entire property; sounds like I should investigate the costs of insurance against ill health or redundancy. Is that the same as mortgage protection insurance? I had one of those products when I first took out a mortgage; after a while I cancelled it, once I felt my post was secure at my employer. Also I was told that the insurer would only pay 12 months' worth of mortgage repayments, or pay the interest only (I forget which), so it seemed like less of a good deal. I will investigate the small print for different insurance policies!

cleg · 21 January 2019 at 9:39PM

You would need to get Income Protection Insurance. Mine pays out until retirement age.

Jackson6 · 22 January 2019 at 1:59PM

cleg, that sounds like the reassurance I would like. May I ask roughly how much the insurance premium costs each month? (I realise this will vary depending on the property value / size of mortgage)

Shared ownership staircasing question

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