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Home » Services » Mortgage Services » Shared Ownership Mortgages » What is Staircasing?

What is Staircasing?

Ciarán Power

Last Updated: February 2nd, 2024 at 6:39 pm

Table Of Contents

Introduction

Staircasing is a unique feature of Shared Ownership that allows you to gradually increase your share in a property, moving closer to full ownership. This page will explore the staircasing process, its benefits, and practical considerations. To bring this concept to life, we will also present a case study illustrating a successful staircasing journey.

Understanding Staircasing

Staircasing refers to the process of buying additional shares in your Shared Ownership property. Initially, you might own a portion (e.g., 25% or 50%), and through staircasing, you can increase your share in increments. This process not only reduces the rent you pay on the remaining share but also brings you closer to owning the property outright.

The Process

You usually choose to staircase when your existing mortgage deal is nearing its conclusion, and you are looking to remortgage. The staircasing process involves several steps:

  • Valuation: Your property must be valued by an independent surveyor to determine the price of the additional shares.
  • Affordability Assessment: You will need to demonstrate that you can afford the increased mortgage and decreased rent payments.
  • Legal and Administrative Steps: Just like your initial purchase, staircasing involves legal paperwork and may incur costs such as solicitor fees and mortgage arrangement fees (we can let you know if this is the case, as often times lenders will offer free legal services or no product fees).

For the most part, the process is much the same as a basic remortgage!

Case Study: Sarah’s Journey

Sarah initially purchased a 30% share of a two-bedroom flat in Bristol, valued at £300,000, for £90,000. Her monthly payments included a mortgage on her share and rent to the housing association for the remaining 70%. After five years, her financial situation improved, prompting her to buy an additional 20% share of her home, now valued at £320,000, for £64,000. This purchase reduced her rent payments significantly, as she now owned 50% of her home.

Three years later, with the property valued at £340,000, Sarah bought the remaining 50% for £170,000, achieving full homeownership. This strategic staircasing approach allowed Sarah to manage her finances flexibly, ultimately leading to her owning her entire home.

Summary

Staircasing offers a flexible approach to homeownership, allowing you to adapt to changing financial circumstances while building equity in your home. It’s a strategic tool, especially for those on a path of financial growth, enabling gradual progress towards full ownership. Remember, each staircasing step should be carefully considered in the context of current market conditions and personal finances. For further insights and assistance with the staircasing process, our experts at Green Mortgages are here to offer personalised guidance, helping you navigate this journey with confidence.

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