House prices have hit a two-year high after jumping 0.3% in August, the latest data from Halifax has shown. Scroll through the Money blog for this plus more personal finance and consumer posts - and leave your comments below.
Monday 9 September 2024 06:34, UK
Every Monday we get an expert to answer your money problems or consumer disputes. Find out how to submit yours at the bottom of this post. Today's question is.
I own a shared ownership property and would like to buy it outright. However, I'm confused as to how a remortgage would work. After searching, I can't find information on how this works properly.
Matthew
Instead of having to raise a mortgage and savings to buy a property outright, shared ownership offers the chance to buy an initial stake in the property and pay a below market rent on the remainder to the housing association, says David Hollingworth, associate director at L&C Mortgages.
This provides more security than renting, as well as giving some stake in any potential house price growth.
As a buyer's personal circumstances change there is also the opportunity to build a bigger stake in the property and buy more shares. Or, as Matthew is planning, to buy the remainder to give full ownership. Buying additional shares is typically referred to as staircasing.
Hollingworth says: "You should talk to the housing association about the prospect of staircasing to full ownership if you haven't already. This will help you understand the necessary process around what you will need to do and how the property will be valued so you know the figures involved.
"When buying an initial share, or remortgaging an existing share, lenders will often offer specific shared ownership deals.
"As you will remortgage to release equity to pay off any existing mortgage and own the property outright on completion, it should open up a wider range of options and allow you to shop around for the best mortgage for you."
How much can you get?
Hollingworth says lenders will typically lend up to 85-90% of the property value, although some may be more flexible.
The maximum could also vary depending on the type of property and will be subject to you meeting affordability.
"There's also likely to be additional legal work involved in shared ownership, so there could well be some additional cost to factor in there," says Hollingworth.
"The right choice may also depend on the current mortgage position.
"If you have a tie-in period on the current mortgage, you may want to see if the existing lender can offer additional borrowing.
"If a deal is coming to an end then it's a good chance to shop around the whole market to find the best deal."
Speaking to an adviser about the specific amounts and circumstance will help you search out the best deal to complete your move to full ownership, Hollingworth says.
This feature is not intended as financial advice - the aim is to give an overview of the things you should think about. Submit your dilemma or consumer dispute via: