Can I Release Equity from a Shared Ownership Property?

Answered on 26 March 2024 by

Is it possible to get equity release with shared ownership? I own 25% valued at approximately £50000.

Nicholas Mendes

Yes, it is possible to release equity from a property with shared ownership.

But there are specific considerations and limitations to be aware of:

  1. Eligibility for Equity Release on a Shared Ownership Property
    • 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
  2. Ownership Percentage of the Shared Ownership Home
    • 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.
  3. Equity Release Options on Shared Ownership Properties
    • If your shared ownership agreement allows for equity release, you may have several options available, including:
      • Remortgaging your shared ownership property to release equity - you may be able to remortgage your share of the property to release equity subject to lender approval, property price increase and how much equity you’ve already built up. This option may involve switching to a different mortgage product or lender. 
      • Selling your shared ownership property and moving to a new one - if you wish to release equity but cannot do so through remortgaging, you may consider selling your share of the property and moving to a different property or arrangement that better meets your needs
  4. Affordability and Financial Assessment of Your Circumstances
    • 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
  5. Legal and Administrative Processes of Releasing Equity
    • 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

Staircasing to Purchase More Equity

If you want to access more equity in the property and increase your share, you can consider staircasing. Staircasing involves purchasing additional shares in the property from the provider, increasing your ownership percentage, and potentially reducing the housing association's share. This isn’t equity release like the previous examples as it doesn’t come out of the share you already own. Instead, it allows you to increase your equity in the property which is an asset you can use later on.

Release Equity from Shared Ownership Property: Summary

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.

Speak with an experienced broker like John Charcol to review your options and secure the funding you need.

Ask The Mortgage Experts answers are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them. We recommend you seek professional advice with regard to any of these topics where appropriate.