Another first-time buyer solution has been launched to enable low-deposit borrowers to purchase an affordable property.
Ecology Building Society has unveiled its Affordable Local Homes mortgage, a 95% loan-to-value (LTV) mortgage for those with ‘limited options’.
The mortgage is designed for buyers of affordable properties through the Discounted Market Sale scheme. The fee-free product has a competitive variable rate of 5.54% and is available up to 95% LTV.
Discounted Market Sale Homes are properties discounted in perpetuity to act as a stepping stone for first time buyers.
They are less well-known than Shared Ownership and also only available to local residents. Indeed, the aim is to encourage communities to thrive and grow by ensuring people can stay in their local areas.
However, restrictions on such homes, while helpful to buyers, put off many mainstream lenders from offering mortgages on them.
Daniel Capstick, senior mortgages product and proposition manager at Ecology Building Society, said: “Most lenders are unwilling to offer home loans on properties with residence restrictions so this lack of mortgage choice risks locking first time buyers out of housing schemes created to help them.
“That’s particularly true of schemes aimed at enabling purchasers to stay in their local area where they have ties to family, friends and work.”
He added: “Our Affordable Local Homes mortgage is designed specifically to support buyers of Discounted Market Sale Homes, whether that’s through government schemes like First Homes, local authority projects subject to section 106 agreements, or community-led schemes by groups such as Community Land Trusts.
“This section of the first-time buyer market is growing, but currently under-served by lenders, so we’re asking more mortgage providers to follow our lead and look at how they can support this customer group.”
Ecology’s Affordable Local Homes mortgage has an extended maximum term up to 35 years, no application fee or ERCs (Early Repayment Charges), as well as unlimited overpayment options, to make it as flexible as possible.
