If you want to remortgage a jointly owned property, the process is nearly the same as getting a regular mortgage, except that not all lenders offer shared ownership and you will, therefore, be restricted to the ones that do.
Since the market for shared ownership lending is limited, this means there are fewer options to choose from, and that mortgage rates are often lower than would be if you were looking for loans on sole ownership of property. However, that does not go on to say that you will have to settle.
There are several specialist lenders out there who can provide
you with competitive rates close to the best ones in the market.
The need for a remortgage usually rises when the financial circumstances of the buyer change. In fact, it is rather normal that buyers find themselves in different financial conditions – better or worse – than when they took out the mortgage a few years ago.
For example, if you feel you can now afford to pay higher monthly installments and therefore pay off your debts faster, you can approach your lender for changes in the original agreement. This should usually be done through an expert broker.
Primarily, borrowers find themselves in one of three situations: they want a plain remortgage, which means moving from one lender to another without increasing the borrowed amount, they want a further advance, which means staying with the same lender but increasing the loan, or they want both, which is to change the lender and borrow additional money.
Note that when getting a remortgage for shared ownership, you also have the option to add or remove someone from the loan, formally referred to as the transfer of equity.
How much can you borrow?
In case of shared ownership, it is possible to borrow up to 80% of the value of your share in the property. This includes the current mortgage as well other loans you may have taken out to fund your property.
For example, if your home is valued at £50,000 and you own 50%, i.e. £25,000, you can borrow up to 80%, which would come to £20,000.
How to get a remortgage?
While the primary process is the same as acquiring a standard mortgage, it is essential to work with a specialist broker to help make sure you get the most out of your loan.
After you’ve decided on a broker, you must provide them with information like details of the current mortgage and the outstanding balance, offer from the new lender, the value of the property through the lender’s valuation report, an explanation as to why you want to switch lenders.
There are further steps if you want to take a further advance along with your remortgage. For this, you must provide your consultant with a written explanation of why you want to increase the amount borrowed.
This has to be detailed; if you intend to make home renovations with the additional money, for example, you must clarify exactly what renovations you are looking for, complete with quotes from renovators and invoices of the work, if it is already in progress.
As a shared ownership leaseholder, when you sell the property, you must provide these quotes, so the valuer can assess whether or not the renovations you made actually increased the value of the property.
You must be prepared, however, for purchasers only paying the original value, despite the extra money spend on improvements – unless you made extensive renovations.
To make sure you get through the process without any glitches, contact our expert mortgage brokers today.