Shared Ownership Staircasing Mortgage
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Can You Get a Shared Ownership Staircasing Mortgage For First Time Buyers?
Absolutely. Quite often first time buyers will get a shared ownership staircasing mortgage and start with a low share. Over time their situation may change and allow them to buy a bigger share. This is basically why the scheme was set up. First Time Buyers often have lower income and lower deposit so will buy a smaller share. Over time their career will progress and they will build equity, allowing them to buy more shares.
What Is A Shared Ownership Staircasing Mortgage?
Basically staircasing is when you own a shared ownership property, you can buy a bigger share. This is usually done when you remortgage. You may start at 25% or 33% of the value, and with staircasing end up with 100%. This is the perfect way to get on the property ladder and then gradually over time buy more and more of your home. You may inherit money, get pay rises, advance in your career. You will also in theory be building equity the whole time so that you can buy more shares.
Can You Get A Shared Ownership Staircasing Mortgage With Bad Credit?
Yes you can get a shared ownership staircasing mortgage with bad credit. Whilst Bad Credit will make it more challenging for you. With Bad credit it will depend on what type of bad credit you have, how much it was for, and when it was. If you have bad credit it’s probably best to speak to a specialist mortgage advisor who can advise what is the best solution for you.
The First step when you have bad credit is to check your Credit report. For this we recommend Checkmyfile as they show you your credit report from the three largest credit referencing agencies. These are the three agencies that lenders will tend to use when assessing you. Once you have your report speak to your Bank or a specialist mortgage advisor for shared ownership to discuss your options.
Can You Get A 95% Shared Ownership Staircasing Mortgage?
Absolutely! You can start on your shared ownership journey with as little as a 5% deposit. As time goes by you will pay that mortgage off, and your property should increase in value. This should therefore allow you to start buying more shares and staircase up to 100% over time.
How Does Shared Ownership Work?
With Shared Ownership you part buy and part rent your home. This allows you to get a bigger property with a smaller deposit or low income.
For example if you had £5,000 deposit, with a standard purchase you could only really go up to a value of £100,000. However with Shared Ownership you could potentially go up to £400,000 as a 25% share if your income supported it.
How To Buy Your Way Up To 100% Of Your Property
This is not a hugely simple thing to do. Firstly speak to your housing association. At the same time speak to a specialist mortgage broker like us to discuss your mortgage options.
Generally if you are planning on increasing the mortgage you have 2 methods.
With a Further advance you ask your current lender for additional funds to buy more shares. They will probably value your home to check it’s worth enough, and assess your affordability.
This is the more common way of staircasing. When you come up for remortgage at the end of your fixed rate, you can remortgage to borrow more money. Either way, it’s best to speak to a specialist mortgage advisor to find out which will be best for you.
Are Shared Ownership Properties Leasehold?
Usually yes, they are Leasehold properties. This means your Housing association is essentially the Landlord, and you the Leaseholder. If you do staircase all the way to 100% you should be able to buy the Leasehold from your Landlord.
What types of Shared Ownership Staircasing mortgages are there?
There’s quite a few, but the main ones are fixed rate and tracker rates mortgages.
Tracker rate mortgages
Tracker rate mortgages tend to track the Bank of England Base rate. So as the base rate goes up or down, so does the interest rate on your mortgage. Therefore your monthly payments can go up and down. This type of mortgage often has a collar or a cap, this stops the interest rate going below or above set amounts. Usually this type of mortgage doesn’t have an Early Repayment Charge so can be quite flexible.
Fixed rate mortgages
These are the most common types of mortgages. You fix your interest rate for a set amount of time. This means your monthly payments will be the same each month for that set amount of time, usually 2, 3, or 5 years. They are good if you want to have stable payments so you can plan your outgoings. They usually have an Early Repayment charge if you want to redeem them.
Discount Rate Mortgages
Discount rate mortgages are similar to tracker rate mortgages. They offer you a discount on the lenders variable rate. This therefore means that as the lenders variable rate goes up or down so do your monthly payments. This can be beneficial when rates are low, but if they go up, so do your payments!
Is there a Shared Ownership Staircasing Calculator?
Unfortunately shared ownership is quite complex, and a calculator would be quite unreliable. If you want to know more about staircasing and how much you can afford you can give us a call. This will mean we can be far more accurate and it should only take 10 minutes or so to go through with you.