What are the benefits of Staircasing?
The Shared Ownership scheme is an excellent way for people who would not normally be able to afford their first step on the property ladder to get the chance to start their home ownership journey. Under the scheme, you are able to buy a portion or share of a property available from an approved body such as a Housing Association or local authority. This means you will only need a smaller mortgage in proportion to the share you own, and a smaller deposit, but you will pay rent to the approved body for the remaining share.
One of the main attractions of the Shared Ownership scheme is the ability over time to increase your investment through the process known as ‘staircasing’. The specialist advisors at The Mortgage Centres will be able to advise you every step of the way to find the most appropriate mortgage to meet your needs.
The pros of Staircasing
Shared Ownership is an affordable way to get your start on the property ladder, typically works out cheaper than renting and means that the money you pay back on the mortgage will be stored in the value of your home. With staircasing you are able to increase the share you own of your home as and when you are able to, up to 100% full ownership of the leasehold. You are also able to sell your property, or share, at any time, and will benefit from any increase in the property’s value.
The cons of Staircasing
Property prices have generally remained strong, so the value of your home may have increased. Any additional portion of your property that you buy will obviously be at the prevailing value, and so the new share may be a lot more expensive than your initial purchase. You will also have to cover other costs, such as the valuation fee and potential Stamp Duty. You will still have to pay rent on any share of the property owned by another party.