Staircasing – buying additional shares in your home
Increasingly, many homeowners are buying on shared ownership or shared equity terms. With the former they own only part and pay rent on the other part. On the latter, they own part of the equity and typically (but not always) do not pay rent on the other part.
With mortgage interest rates being at an almost all time historic low, you may be considering increasing your share. Quite often doing so is cheaper than or comparable to paying rent or the interest chargeable on shared equity deals after the first five years.
Buying additional shares is called Staircasing and to do so, you need the know the current Market Value of the property. It’s that Market Value which determines the price you pay. For example, staircasing up 10% on a property with a Market Value today of £300,000 would cost you £30,000.
Before deciding to staircase, you should always check you can afford a property, particularly if you are taking a mortgage as interest rates could go up or down.
Staircasing gives you a few distinct benefits:
1) Your rent would reduce on a shared ownership property
2) If you own a shared equity property where interest is going to be chargeable (typically 1.75% of the loan amount after 5 years, increased by inflation each year), it can reduce the interest payable
3) If the property value increases, it is cheaper to staircase now than in the future. You then benefit from the increase. Remember though, values can rise or fall
4) The higher the share you own, the more mortgage choices you have. For example, staircasing to full 100% ownership can mean that you can secure a cheaper mortgage on the entire loan
5) If you own it, you control it
Once instructed to carry out a Valuation, we are normally able to provide our report within a week and can often, if necessary meet tighter deadlines where required. Larger portfolios may of course take longer but we will discuss implications with you at an early stage.
At Websters, we are Chartered Surveyors, regulated by the Royal Institution of Chartered Surveyors. Our services span most of London and some surrounding areas including Hertfordshire, Buckinghamshire, Essex and parts of Surrey and Sussex.
Please contact us if you would like to discuss your requirements on 020 8017 1943.