Yes, it is possible to release equity from a property with shared ownership, but there are specific considerations and limitations to be aware of:
- Eligibility – whether you can release equity from a shared ownership property depends on the terms of your shared ownership agreement and the policies of the housing association or provider that owns a share of the property. Not all shared ownership schemes allow equity release, so it’s essential to review your agreement and check with the relevant authority
- Ownership percentage – in a shared ownership arrangement, you typically own a percentage of the property (e.g., 25%, 50%, or 75%), while the housing association or provider owns the remaining share. Any equity you release will be based on your ownership percentage, not the total property value
- Equity release options – if your shared ownership agreement allows for equity release, you may have several options available, including:
- Staircasing – staircasing involves purchasing additional shares in the property, increasing your ownership percentage, and potentially reducing the housing association’s share. This can allow you to release equity by increasing your equity stake in the property
- Remortgaging – you may be able to remortgage your share of the property to release equity, subject to lender approval. This option may involve switching to a different mortgage product or lender
- Selling and moving – if you wish to release equity but cannot do so through staircasing or remortgaging, you may consider selling your share of the property and moving to a different property or arrangement that better meets your needs
- Affordability and financial assessment – before releasing equity from a shared ownership property, you’ll need to undergo a financial assessment to ensure that you can afford the increased costs associated with equity release, such as higher mortgage payments or additional shared ownership payments. The housing association or provider may also assess your eligibility based on their affordability criteria
- Legal and administrative processes – releasing equity from a shared ownership property involves legal and administrative processes, including obtaining approval from the housing association or provider, updating legal documentation, and potentially arranging a new mortgage or financing arrangement. It’s essential to follow the required procedures and seek professional advice from solicitors, financial advisors, or housing specialists
Before considering equity release from a shared ownership property, it’s crucial to carefully review your shared ownership agreement, understand your rights and obligations, and explore all available options. Consulting with relevant authorities and seeking professional advice can help you make informed decisions and navigate the process effectively.
Speaking with an experienced broker like John Charcol can help you review your options and secure the funding you need.
