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Shared Ownership Remortgage

Are you looking to remortgage the property you purchased on a shared ownership agreement? Then check out this guide to learn how you can undertake a shared ownership remortgage.
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For many first-time property buyers, the shared ownership scheme may seem useful since it provides a step onto the property ladder for individuals who may not have a large deposit or the ability to borrow a large sum for their mortgage needs.

Moving forward, you do have the option to remortgage the shared ownership property in order to purchase further shares within the property

That gives you more control over the property while simultaneously reducing rent requirements on the proportion you don’t own.

We’ve put together a guide to hopefully help you through the intricacies of remortgaging your shared ownership property.

What Is Shared Ownership Remortgage?

what is shared ownership

If you want to get familiar with shared ownership remortgages, you need to understand what shared ownership means first. 

Simply put, shared ownership is when someone purchases a part of a home instead of the entire property. 

In other words, it allows the buyer to purchase smaller “shares” of the home, giving them partial ownership. 

As such, they need to pay rent on the shares they do not own. 

That is why they are common among first-time buyers, who may not have the deposit or the income to purchase 100% of the property. Most shared ownership properties are managed and delivered by housing associations.

On that note, a shared ownership remortgage is a type of financing solution that involves remortgaging an already owned shared ownership property to either purchase more shares or to switch to a new mortgage product at the end of their fixed rate deal. 

With the help of shared ownership remortgages, you can gradually increase the percentage of your ownership until it reaches 100%. This is achieved through the process of staircasing, therefore giving you more control over the home. 

You need to keep in mind that shared ownership remortgages are no different from regular remortgages in principle, but you will need to meet certain lending criteria such as affordability assessments, to make sure you are able to purchase more of a share.

Staircasing A Shared Ownership Property

Most shared ownership schemes allow staircasing, which is basically a framework that enables the buyer to purchase larger shares of a home at any time. 

As we have suggested in the previous section, staircasing allows you to purchase shares of the property in a variable number of increments until you have full ownership.

Originally, buyers were required to purchase a 25% share in a property. Likewise, the standard staircasing increments were fixed at 10%. 

However, a new rule was passed by the government recently, which lowered the minimum purchasable share from 25% to 10%. 

At the same time, it lowered the standard staircasing increments to 5%. It even introduced a gradual staircasing plan that allows buyers to buy as low as 1% shares of the property every year.

Naturally, such a change can be highly beneficial for homeowners looking to get a shared ownership remortgage. 

That’s because it allows the buyer to apply for smaller remortgage amounts, making it financially easier to manage. 

What Is The Process Of Getting A Shared Ownership Remortgage?

For a first-time home buyer, the process of getting a shared ownership remortgage may feel quite intimidating. However, the process is not as complicated as it seems.

We have discussed the steps below for your convenience.

Step 1: Talk To Your Housing Association

The next step in the process requires you to inform the housing association about your intention to remortgage. 

Since you have shared ownership over the property, you won’t be able to apply for a remortgage without the approval of the housing association.

Usually, the terms and conditions for shared ownership depend on the local housing association and council schemes available in your area. 

The housing association will only approve your remortgage request if it meets all the terms and conditions, which is why you should go through them carefully. In that context, the best strategy for accomplishing this step may vary from one region to the next.

Step 2: Wait Until The Valuation Process Is Complete

After you have informed the housing association of your plan to remortgage, they will perform a valuation of the shared ownership property. This is mainly done to determine the value of the share you own, which indicates your equity in the property.

In most cases, housing associations do not allow external agents to conduct the valuation. They will only accept agents who are accredited by the RICS (Royal Institution of Chartered Surveyors) for this task. That is why most associations generally send agents that they have picked to conduct the valuation.

Alternatively, they might provide a list of accredited surveyors that you can choose from. This helps ensure that the process is completed seamlessly and thoroughly.

Step 3: Remortgage

Remortgage Property

Once the valuation is complete, you will need to act quickly to obtain the remortgage from the lender. 

The valuation is valid only for a period of three months, after which it expires, thereby requiring you to pay for another valuation.

In this regard, the subsequent process of applying for the remortgage is the same as getting a regular mortgage. 

You need to provide all the necessary documents to the lender, along with proof of your income, address and identification.

The lender will then fully assess your application and if they are happy at that stage they will issue your mortgage offer. 

Costs

Remortgaging your shared ownership property may incur costs during the application process, such as:

  • Valuation fees 
  • Administration fees
  • Legal fees
  • Lender arrangement fees

The fees vary depending on the type of lender, location, housing association terms and other associated factors. 

Conclusion

Obtaining a remortgage on your shared ownership does come with a few more hoops to jump through than a standard remortgage but with the right guidance and information the process can be quite straightforward. 

Of course, it is highly advisable to seek help from a professional broker or financial advisor before proceeding with the remortgage. They can help you through the process from start to finish and find you the best possible outcome for your personal circumstances. 

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.

George Rogers LendingLine
CeMAP & CERER Qualified Mortgage Adviser

I am CeMAP & CERER qualified mortgage adviser and have helped a number of clients realise their dreams when they thought it would not be possible. I’m skilled at getting mortgages sorted for people with a history of missed payments, CCJs, defaults, debt management programmes, IVAs and bankruptcies.

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Are you looking to remortgage the property you purchased on a shared ownership agreement? Then check out this guide to learn how you can undertake a shared ownership remortgage.
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