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Lender says...

Cheshire Building Society has launched a shared ownership mortgage it believes will help more first-time buyers who do not want to buy with friends get on to the property ladder.  

The lender's fixed rate mortgage follows on from the government's call to get more priority first-time buyers on to the property ladder.

The product offers a rate of 6.8 per cent for the first three years, moving to the standard variable rate for the rest of the mortgage term. Cheshire will also pay the arrangement fee and standard valuation fee.

Under the government's HomeBuy scheme first-time buyers earning less than £60,000 can purchase a percentage of a property with the remainder belonging to an organisation, typically a housing association, to which rent is paid.

Loans are available up to 100 per cent of a share in the property and 75 per cent of the property value.

A booking fee of £100 is payable on application and will be refunded within 10 days of completion.

In the event of the mortgage being repaid, in full or in part during the fixed rate period, an early repayment charge applies of 3 per cent in the first year, 2 per cent in the second year and 1 per cent during the remaining fixed rate period.

The charge will be made on the original loan amount or, in the case of part repayment, the amount of capital repaid.

James Taylor, mortgage product manager for Cheshire Building Society, said: "Shared ownership is a great alternative to buying with friends, allowing individuals a helping hand to get on the property ladder in a gradual way and still benefit from any increase in the value of the property with the option of purchasing a greater proportion of the property in the future."

Adviser says...

James Carter, proprietor of London-based IFA Independent James, said the product was not too bad considering the 100 per cent purchase share.

He said: "A lot of people in shared ownership schemes may not have huge savings so it will help them that way as well as the incentives on the fees.

"Even though the headline rate is not brilliant the fact there is not an arrangement fee will make it quite competitive.

"I am not sure how advantageous it is to go into shared ownership at the moment but it is still the only available step for some people."

Rating: 4/5 stars