Buying Property News
5&5 Scheme helps First-Time Buyers
21st March 2011
Pic: 5&5 first-time buyer mortgage
This novel mortgage allows motivated sellers to gift 5% of the property value in equity to the first-time buyer.
Motivated sellers are asked to give first-time buyers 5% of the property value in equity. Buyers must then raise just 5% of the property value to qualify for a 90% mortgage.
Independent mortgage broker Obligo has launched a new scheme to help first-time buyers qualify for a mortgage.
In real terms, first-time buyers seeking to purchase a property worth £100,000 through the “5&5” scheme would have to raise £5,000. The vendor would then match this price out of their own equity to meet the mortgage requirement of £10,000 – 10%. Effectively, the vendor sells the house for £95,000 (5% less than its worth) but the process guarantees a smooth sale. If the vendor were to simply drop the house price to £95,000, the prospective buyer would have to raise £9,500 to qualify for the mortgage – a tall order for first-time buyers and one which may slow the transaction.
In this difficult market for first-time buyers, sympathetic lenders are emerging to ease the pressure. Lloyds TSB already offers ‘Lend a Hand’, which allows first-time buyers and those with small deposits to take out a mortgage with the financial support of someone else, eg. parents. The bank is now extending the first-time buyer mortgage to include local authorities who wish to help first-time buyers in the area.
Links related to this article
Saturday, 16 April 2011
5&5 Scheme helps First-Time Buyers - Property News from ludlowthompson.com
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