Mortgages  

Teachers BS in shared ownership expansion

Teachers Building Society has expanded its shared ownership mortgage, making it available to remortgage customers as well as home purchasers.

The product, available with up to 95 per cent LTV, comes with no arrangement fee and a £99 application fee. Early repayment charges are applicable.

It offers a variable rate of up to 4.25 per cent for the first three years, after which it reverts to its SVR.

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The remortgage package includes free valuation and £250 towards legal fees.

In May, the society made its help-to-buy mortgage available for remortgage and home purchase.

The loan, which has a discounted variable rate of 2.44 per cent for the first two years, is available at up to 75 per cent LTV for people with an existing help-to-buy mortgage. It comes with an £899 arrangement fee and £99 application fee.

As previously, there is free valuation and £250 towards legal costs.

Provider view:

James Bawa, chief executive of Teachers Building Society, said: “Making this mortgage available for remortgage is all part of our commitment to supporting affordable home ownership schemes.

“At Teachers we want to make sure that both teachers and local people, who purchased their property through one of these schemes, are able to come to us for a remortgage. This mortgage is competitively priced and available for up to 95 per cent of the share owned.”

Adviser view

Kevin Gates, of London-based IFA Gates Financial Services, said: “The rate seems a bit high. I think lenders can do more to make shared ownership schemes more attractive, although it is good to see that there is no arrangement.

“Share ownership schemes are not every lender’s cup of tea, because they are quite complicated as financial products, and not many borrowers tend to purchase the property outright.

“Demand for such schemes is high, particularly in London. There are many first-time buyers who are looking to get away from their parents’ homes and enquire about this scheme, but the numbers of lenders offering them are limited.

“With rates as low as they are now, waiting to build a greater deposit to secure a traditional mortgage could be the best option for many.”

Charges

£99 application fee

Verdict

Shared ownership schemes are a way of helping people get onto the property ladder and secure a home that they would otherwise have been unable to afford. The individual can then save up to buy a greater share of the property over time.

However, the very few providers offer the scheme, and those who do tend to implement strict qualification criteria. Furthermore, those wishing to sell in the future may have difficulty finding a buyer willing to buy into the scheme.

The shared ownership scheme, by its very nature, is problematic. The prospect of seeking permission from the housing association to make home improvements will be unappealing for many.

The lack of arrangement and valuation fees, along with the £250 towards legal fees, will go some way to sweeten this proposition, but the variable rate may prove too high.