Britannia and Coventry building societies have both launched innovative mortgage deals to offer consumers the extra financial boost they need to get onto the property ladder.
Two new but very different products have been designed to give consumers both a traditional mortgage package and an additional source of money so they can purchase properties which might otherwise be out of their reach.
It does of course means the buyer will end up paying slightly more than they would usually have to pay to take out a mortgage, but each deal has been designed to effectively ‘top-up’ the client’s mortgage offering and giving them the additional funding they need by taking that extra investment outside the bounds of traditional income multiple recording.
Britannia’s latest product offering is a partnership with the Police Mutual Assurance Society to specifically provide police officers with a shared equity mortgage scheme financed by institutional investors.
In order to qualify for the mortgage, the buyer must hold at least 51% of the equity in a house using a mortgage from Britannia while the equity loan can provide the balance of the required funding, up to maximum of 49%.
A client looking to buy a house worth £150,000 but can only afford a mortgage of £100,000 can then apply for an equity loan of £50,000 - equating to one-third of the property’s value - and pay an extra 2% interest on the portion owned by the £10m institutional investor retail property fund.
That extra 2% could be deferred for three years and will also be rebated if house prices increase by more than 10% a year, says Britannia.
Coventry’s MOREgageproduct, build as a combined mortgage and unsecured personal loan is targeted at first-time buyers and first time movers to cover not only the purchase price of a house but the associated costs of building deposits, renovation and the purchase of furniture and appliances.
The main mortgage product offers up to 95% Loan To Value so any additional finances are taken up by adding an unsecured personal loan of up to 30% on top, to give the buyer a mortgage with a 5-year fixed interest rate of 6.795 on 116-125% LTV (95% mortgage and up to 30% UPL).
Coventry says its own research suggests the new product would benefit first-time buyers as one-third are prepared to take out a personal loan facility to gather the deposit while 23% of those questioned would furnish their homes either through more expensive loans or credit cards.
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