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    • thetonyshort
    • By thetonyshort 12th Jul 18, 6:08 PM
    • 11Posts
    • 1Thanks
    Shared Equity on Property is due next year and experiencing challenges to pay it
    • #1
    • 12th Jul 18, 6:08 PM
    Shared Equity on Property is due next year and experiencing challenges to pay it 12th Jul 18 at 6:08 PM

    9 years ago we purchased a new build property and opted for a Shared Equity arrangement of 25% to the Builders, who later sold the shared equity to Optimum Credit. That arrangement is due to expire in June 2019, therefore we've been looking to make arrangements to repay it with a remortgage. The property has been valued at 189,000 and the outstanding mortgage is 102,000. With the shared equity of 47,000 that takes a new remortgage to 149,000. Unfortunately, I have learnt today that we won't be able to remortgage to that amount due to affordability due to us having too many outstanding loans, which are 2 x car loans and a personal loan. I'm not in the position to pay off these loans until at least 2020.

    We don't have any other means of paying off the shared equity and therefore I am concerned about the shared equity and not being able to pay this back when it's due.

    I'm planning on speaking to Optimum Credit tomorrow to discuss what our options are. In the meantime, does anybody have any experience of this in terms of what our options are?

    Kind Regards

Page 1
    • PasturesNew
    • By PasturesNew 12th Jul 18, 6:13 PM
    • 65,779 Posts
    • 386,233 Thanks
    • #2
    • 12th Jul 18, 6:13 PM
    • #2
    • 12th Jul 18, 6:13 PM
    Every deal would be different, but there can only be a limited number of scenarios:

    1/ They want their money, so you sell up and settle up and start again.
    2/ They are happy for the arrangement to continue, with their nice high rate for their 1/4 of the property to be paid monthly - with each month's payment you knowing that the value is going up so the dream is further from reach.

    They can't/won't just say "OK, call us in 10 years and see how you're doing". They will want money one way or the other: in full, now, you've had 9 years of planning .... -or- ... here's a monthly deal that'll crush your finances to bits.

    They don't want you to fail ... but the deal was the deal, so, in the absence of a genius master plan ... you're going to have to pay something somehow ... or accept the fact that you had a good innings and sell up.

    What do you WANT? You will need to know what you want before you contact them... if you don't know what you want then you won't be able to make a choice.
    • thetonyshort
    • By thetonyshort 12th Jul 18, 6:25 PM
    • 11 Posts
    • 1 Thanks
    • #3
    • 12th Jul 18, 6:25 PM
    • #3
    • 12th Jul 18, 6:25 PM
    Thanks for the response and offering that insight.

    In an ideal scenario is they would allow me to pay a monthly fee for the outstanding 25%. The objective would be to pay off the outstanding loan, which has two years remaining, at that point to remortgage which would include their remaining %.

    Thanks, Tony
    • xpc
    • By xpc 13th Jul 18, 10:17 AM
    • 38 Posts
    • 22 Thanks
    • #4
    • 13th Jul 18, 10:17 AM
    • #4
    • 13th Jul 18, 10:17 AM
    You say that the loan has 2 years remaining, and the shared equity arrangement expires in 1 year, and you would like to agree a monthly payment until the loan is cleared.
    This would mean that you would be paying both the personal loan and a shared equity payment for the 1 year that the two would overlap. Does this mean you have spare income to cover this? If this is the case, can you not divert the money now to try and clear the loan within the next year before the shared equity is due? Or maybe on a car loan if the rate is higher, either way you would reduce your overall debt commitment and would expect to get a higher mortgage.

    Obviously this would only work if you have spare cash each month to put to one of the loans - and may still not work as you cannot guarantee that you will get the required mortgage in a year as interest rates or affordability criteria may change.
    • kingstreet
    • By kingstreet 13th Jul 18, 12:00 PM
    • 34,777 Posts
    • 18,912 Thanks
    • #5
    • 13th Jul 18, 12:00 PM
    • #5
    • 13th Jul 18, 12:00 PM
    Unfortunately, I have learnt today that we won't be able to remortgage to that amount due to affordability
    Originally posted by thetonyshort
    This was confirmed by whom?

    Independent broker?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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