Increase In Shared Ownership Loans
For a large percentage of first time buyers, obtaining the necessary homeowner loan they need to be able to purchase the house they want is often well beyond their financial ability, either due to being unable to afford the regular monthly loan repayments, or not having sufficient deposit to meet lenders’ current low loan to value restrictions.
As a result, many are forced to either continue living with their parents, or to rent a house until such time as they are able to afford a homeowner loan of their own. One alternative option which is growing in popularity, is that of shared ownership.
Shared ownership has been in existence for many years, but is growing in popularity recently due to extra publicity and the Government’s Homebuy scheme. Shared ownership allows a first time buyer to take out a loan to purchase a 50 per cent share in the property and then pay rent on the remaining 50 per cent of the property.
As the borrower’s financial capacity increases, there is the option to take out further loans to purchase additional shares in the property, until it is owned outright (known as staircasing). Cheshire mortgages is a company who specialise in shared ownership loans and they say they have seen an increase of around 16 per cent in new business over the course of the past twelve months.
Gary Bailey of Cheshire Mortgages said “A lot of high street lenders are reluctant to get involved in shared ownership lending but the fact is that there is a growing demand for these products. There are increasing numbers of first time buyers for whom shared ownership schemes are the only way they can hope to get a foot on the housing ladder and contrary to what many seem to think, shared ownership does not have to equal sub prime.”
