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Newbury enters two-year shared ownership market

Newbury enters two-year shared ownership market

Newbury Building Society has launched a two-year 3.79 per cent fixed rate shared ownership mortgage at 95 per cent loan-to-value (LTV).

Borrowers must have a minimum 25 per cent share of the property being purchased.

Product features include free valuation and no booking free.

The product applies early repayment charges of 3 per cent until 29 July 2020, then 2 per cent until 29 July 2021.

Overpayments are allowed up to 10 per cent of the original loan amount per year.

The deal is available to remortgage customers and existing borrowers transferring their existing mortgage, when taken in conjunction with a further advance for 'staircasing', where they can purchase further shares in the property.

The minimum loan amount is £50,000, with a maximum of £300,000.

For existing borrowers, the minimum loan is £40,000 when transferring for staircasing only.

Roger Knight, lending manager at Newbury Building Society, said: "Ensuring intermediaries have access to products which match their client’s needs is of utmost importance to us.

"Following conversations with several different networks and clubs, it was evident there was an appetite for a two-year fixed product and therefore launching such a product was a natural step for us to take."

Nick Morrey, mortgage technical manager at John Charcol, said while Newbury's deal is a welcome addition to the shared ownership market, it is not as competitive as it could be.

He said: "When comparing it to other two-year fixes, Newbury's product comes about seventh down the table. Barclays, which interestingly is the only big high street lender offering a two-year shared ownership fix, has a rate of 2.88 per cent, which is quite phenomenal.

"I would say when it comes to larger loans, the lower rates offered by Barclays and Hanley Economic, which has a two-year fix at 2.99 per cent, would be better value for customers.

"When the loans are smaller, that is when the higher rates offered by the likes of Newbury may be considered as they may provide better incentives."

Dippy Singh is a freelance journalist