Shared Ownership Remortgage

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There are various uses for a shared ownership remortgage, and it doesn’t differ much from a standard remortgage. The obvious distinction is that the property isn’t owned by just one individual and it isn’t owned outright. Only lenders that offer shared ownership mortgages will offer this type of remortgage.

Think Plutus is experienced in dealing with shared ownership and mortgages. With access to the entire mortgage market, our advisers can explore the full range of shared ownership remortgages to find you the best deal available. Our team is just a phone call away, or you can enquire online and we’ll get back to you.

What is a shared ownership remortgage?

A shared ownership remortgage is a process wherein a new mortgage is obtained on a property that is under shared ownership. If a property has shared ownership, it may have been bought via a government mortgage scheme like help to buy shared ownership.

Staircasing in shared ownership

An individual’s shares in a property usually range from 25% to 75%. By remortgaging a shared ownership property, you can increase your shares up to 100% to become the slow owner of the property. We call this shared ownership staircasing.

Staircasing in shared ownership enables a shareholder to continually purchase more shares of the property. The analogy is that of climbing a staircase, set-by-step, representing the process of buying a few shares at a time. Staircasing can usually be done a maximum of three times, so it’s important to check the relevant terms and conditions.

You increase your shares either by taking a further advance or by taking out a shared ownership remortgage.

The further advance option: Your current lender may be open to provide a further advance of capital to boost your shares in the property. A valuation of the property will be required in order to confirm there is sufficient equity. You may also be subject to a new affordability test, so expect to provide proof of your income.

Shared ownership remortgage: You may be able to apply for a larger loan by switching to a different mortgage lender. Your current lender will be repaid in full and you will be left with additional capital to buy more shares in the property. You will probably need to go through the processes of valuations and income assessments.

Remember that there are always terms and conditions in a shared ownership arrangement, depending on whose scheme you are on. Make your housing provider aware of your intention to remortgage – Think Plutus can help do this the right way.

Calculating share values

Once you’ve contacted your housing provider and given them the heads up about your plans to remortgage, they will usually request a property valuation. This will determine the value of your shares, giving you a clear indication of how much equity is available and what the value of the shares you wish to purchase are.

If the property is valued at £150,000 and you wish to purchase an additional share of 25%, the cost will be 25% of £150,000: £37,500.

Ensure that an accredited surveyor carries out the valuation. Your housing provider is unlikely to accept an estate agent valuation unless the individual who does it has RICS accreditation. You may be able to get a list of accredited surveyors from your housing provider.

The typical lifespan of a valuation is 3 months. If you don’t remortgage within that 3 month period, you will have to schedule a new valuation. Ensure everything is prepared beforehand to ensure your valuation doesn’t expire, or you’ll end up having to pay more.

Why remortgage a shared ownership property?

The most common reason to remortgage a shared ownership property is to gain ownership of more shares. By increasing your shares in a property, you will gain more from any increase in the value of your home. As equity builds up, it becomes a lot simpler and more viable to remortgage. Staircasing is a popular goal as it’s a good way to eventually own a property outright.

By increasing your shares you will also reduce any rent you’re having to pay. If you decide to sell at any point, having more shares will enable you to cash in more, especially if there has been a significant increase in the property’s value. If you manage to staircase your way to 100% ownership, you will eliminate rent from the equation entirely.

A shared ownership remortgage may also enable you to get a better deal. Your current mortgage rate could be higher than you’d like or you may be coming to the end of your initial discounted period. By remortgaging, you may be able to access a superior interest rate and enjoy more flexible terms.

There are various reasons people look for a shared ownership remortgage, so it is highly recommended that you consult a specialist mortgage broker. Think Plutus can weigh up your goals for a remortgage and find you the best deal available.

Fees for a shared ownership remortgage

There are always costs associated with a mortgage. The costs involved in a remortgage for shared ownership tend to be slightly higher. This is because only certain lenders are willing to arrange mortgages with shared ownership. It is not considered a mainstream market, so it is less competitive, meaning lenders who do offer shared ownership mortgages often charge slightly higher fees. Nonetheless, if you know where to look, there are still some pretty good rates to be found.

You may find that remortgaging with your current lender is the cheapest option, as there are often costs associated with changing lenders. However, it may be that other lenders offer to cover these additional fees.

The fees involved include:

  • Valuation fees
  • Lender arrangement fees
  • Legal fees
  • Admin fees
  • Stamp duty

All remortgages vary in these fees, and you will find products that include all, none, or some of the fees listed above. Some, like stamp duty, are not negotiable but you may be able to take up options like paying stamp duty in stages.

A simple remortgage or shared ownership staircasing?

Whatever your reasons for considering a shared ownership remortgage, it can be difficult to identify the best option for you. You may just want to remortgage to get a better rate, or your objective may be to eventually own your property outright through staircasing.

Enquire now to ask our mortgage experts your questions or get started on the remortgage process.

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