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Shared equity strategies – a helpful step on the property ladder
The increase in UK house prices over the past few years has made it very difficult for people to get a foot on the first rung of the housing ladder. It is estimated that with the average house price around £180,000 and the average salary at £23,000, more than half of the working population are unable to obtain a mortgage, and therefore are excluded from buying a home.
In addition, for those that have managed to purchase their first home, they may find they are unable to move due to circumstances changing. This could be a growing family, where one partner stays at home or works part time, therefore reducing the levels of income to the household.
If you find yourself in this position, don’t despair, it is possible to realise your dream and buy your first home or a larger one to suit your changing needs. In fact, lenders and the Government are seeking ways to actively help first time buyers onto the property ladder.
Flexishare
The need for better access to the housing ladder has fueled innovation in the mortgage market with lenders creating products that specifically solve these problems. Typically this will be based on an affordability model rather than on income multiples with the money lent in a responsible way. This innovation has seen the launch of new types of mortgages that help people share the risks of homeownership with the lender. For example mortgages which would make the amount you owe on the mortgage, fluctuate in line with the value of your house so if your house price went down, what you owe on the mortgage to the bank or building society would also go down. One such product, available to everyone is Flexishare, launched in July 2006 by Advantage, the innovative lender part of Morgan Stanley. At ITV Local Mortgages we have exclusive rates on the Flexishare scheme and our experienced advisers can help you with other shared equity solutions
Open Market HomeBuy Initiative
The Government has also introduced schemes to help people get onto the housing ladder. One such scheme is the Open Market HomeBuy initiative, which sees four major lenders Advantage, HBOS, Nationwide and Yorkshire Building Society providing a mortgage of up to 75% of the value of the property.
Getting a foot on the housing ladder is not as difficult as it may seem.
We charge a simple one off fixed fee of just £195 for remortgages, £375 for purchases, £750 for buy to let and £995 for credit impaired-mortgages.
Alternatively, for purchase and remortgage business for your own residence you may pay a fee of 1% of the mortgage (2% for credit impaired mortgages) and any commission received from the lender will be returned to you after completion. The minimum fee is £1,000 (£2,000 for credit impaired mortgages). On a mortgage of £180,000 the fee payable on completion would be £1,800 (£3,600 for credit impaired mortgages).
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.