Become a full owner of your shared ownership property and buy the remaining shares before prices continue to raise.
Historically Britain was known as a nation of home owners now the reality is often a fanciful notion with shared ownership in conjunction with a mortgage offering the only plausible stepping stone into UK homeownership. That does not completely put the brakes on the Aspiring as normally the housing association purchase contract provides a set structure to ‘staircase’ i.e increase your initial share in the shared ownership property. The good news is the additional share purchase can be financed to assist you becoming a full owner of your shared ownership property.
Affordability
As with all finance secured against a property (mortgage) affordability is going to be key. Originally you may have settled on a 25% share of your shared ownership property as the mortgages would not stretch any further on your income. The reality is you are probably servicing a high rent on the portion you do not own and heavy property management service charges. Of course, your finances might have improved and importantly your awareness has too hence you are reading online. At Niche we can access a number of lenders that will lend up to 5 times salary for applicants looking to buy their remaining shared ownership share, and some that will go as far as 6 times salary.
Residency Rights
We have helped a number of foreign nationals into UK ownership via the shared ownership schemes. Many of these have been in high paid professions, such as IT contractors. Now their Visas have gone as they have been given indefinite leave to remain. This will open the doors to additional lenders so we are likely to be able to improve on the original terms offered to purchase the initial shared ownership deal at the same time as releasing the capital needed to secure full ownership.
How much equity will I need to finance my full ownership in a housing association property?
In terms of overall equity in the property you are realistically looking at a minimum of 15% before you can access a mortgage to buy your remaining share in a shared ownership property.
For example:
Current Property Value £325,000
Existing share value £80,000, all on mortgage
Maximum you can obtain on a mortgage £276,250 (85%)
Less existing share £80,000
Leaves mortgage proceeds of £196,250 towards purchasing the remaining share of your property.
If you need the absolute maximum you should speak to a Professional Shared Ownership Credit Broker, such as Niche Advice, as they will need to negotiate with the banks, particularly in the property has been built in the last few years (new build) as they generally are nervous around the value of this property type and this will have a major factor in the lender’s appetite.
For expert advice on Shared Ownership please call T: 020 7993 2044 and ask to speak to me personally or complete the online enquiry form on this page.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
