How to climb the housing ladder with shared ownership

[spoiltforchoice11]

We dont have a mortgage at the moment and live in a shared ownership 2-bed flat in London with no possiblity of staircasing to full ownership (our lease doesn't allow it). Our share is worth about 350k. We're desperate for more space, but house prices in London are ridiculous right now and we're not high earners. So the jump to a 3-bed place is just too high and we're stuck here. Our kids are settled in school and we dont really want to move away from the area we love. I was wondering if there was any way of using the equity we have to make money somehow to enable us to move up the ladder at some point. Or do we just have to resign ourselves to the fact that we'll have to move further out to get any more space?

Tricky.

Best speak to a broker. Ideally you would remortgage the share you own in order to buy an investment property that you could then look to make some money on over the next few years (though no guarantee). The only issue here is that I don't think their are any mainstream lenders that will allow you to remortgage and take equity out of a shared ownership property.

It is a shame you can't staircase fully. Are you 100% sure the lease doesn't allow it? If it did, you would be able to convert your current flat to a buy to let (which isn't based on income affordability, but rather rental yield) as I am presuming the equity you have is over 25% of the total value (most BTL mortgages require min 25% deposit) and then at the same time, purchase a residential mortgage property to live in. You would then have 2 properties. In time, you could sell both to buy a better place in a preferred area.

Could you sell your place and buy a bigger shared ownership, either with a mortgage or taking a lower % share to keep it affordable?

I have to agree, it's very unusual for a lease (of all things) to prevent full staircasing. I've only done casual research for my job (mortage company), but I haven't heard of anything like this. I was also under the impression that most shared ownership mortgages required the ability to full staircase. I would double check this as alloveragainandagain suggested.

I believe the only way to release this equity would be to remortgage, but once again, I'm not too sure a mortgage company would be happy with this for a shared ownership where the purpose wasn't to buy more shares.

You are also looking to find a better rate of return that the mortgage rate you would be paying after releasing this equity. The suggestion of the investment property would be the best rate of return, BUT... the profitability on BTL is going to be hammered soon. I won't bore you with the details, but the rent received will increasingly be counted as your income, possibly pushing you into a higher tax bracket and wiping out any return you may be making.

Stocks and Shares have been fairly volatile, even funds have been a bit up and down recently. You are also putting any capital at risk, particularly if you are talking about doing this in the short term.

You may have to come to terms with staying put or moving to a better market (I've had the same realisation myself in the past couple of years). Otherwise you are looking at trying to increase your equity by overpaying (I'm assuming you have a mortgage), or hoping that your company offers you a massive pay raise... we can live in hope!

Thanks all. The deal we have doesn't allow staircasing, but we pay no rent on the share we don't own (unlike traditional shared ownership). I will double check though as that sounds like it could be the best option for now. No, we don't have a mortgage -- we paid it off.

Koala - that's something I'm looking into as well, but 3-bed shared ownership places don't seem to come available very often or are massively expensive.

Part exchange with the people you got the current property with? I know you can do that with Barretts