First-time Buyer  

Peer-to-peer scheme for first-time buyers launches

"The worst case scenario is that someone has used the money to buy a property. In this case, a member cannot drop out of the circle as they would owe the circle the remaining payments.

"However if they become sick or unemployed we have payment waiver cover in place to make payments on their behalf. We would work with them on a repayment schedule and this would not affect other members of the circle."

But Craig Parkinson, mortgage and protection consultant at Continuum, said: "I am not too sure on this approach to saving. If the ‘lucky’ person wins in the first month then they are still committed to paying £1,000 per month for however long. 

"There must be a tie-in clause otherwise the moment someone does win and uses the money to buy a house, they would just leave, and this could affect the savers' ability to get a mortgage or how much they could borrow."

A spokesperson from Stepladder also said the firm engaged directly and confidentially with many national banks and building societies to align their underwriting with the bank’s affordability criteria.

The firm said Stepladder was an acceptable source of deposit to these lenders and stressed they were able to introduce members to several nationwide mortgage brokers and a number of mortgage providers through their support scheme.

The spokesperson said: "Most of our members that have been awarded their deposits so far have been introduced and are getting mortgage agreements in principle from these organisations as they start to hunt for properties.

"Our first member to buy a home, Shanae, got her mortgage through the mortgage broker we introduced her to."

Ruth Whitehead, director at Ruth Whitehead Associates, said the scheme would only be advantageous for those who were picked within the early stage of the timeline.

"It would concern me because often when you’re looking to buy a house, you need the money straight away and you need to be in control of your finances. I would prefer to maintain my money individually.

"Personally, I would rather borrow money from family or another source such as Help to Buy to bridge the gap. I wouldn’t want my finances involved in another person’s timeline."

Ms Whitehead also noted Stepladder charged a monthly fee for the service which is typically between 2 and 4 per cent of the monthly contribution, based on the length.

She added: "With this monthly charge, what’s the difference between you taking out a loan which you have complete control over?"

Stepladder confirmed the fee was used to cover features such as secure holding, the payment waiver, credit bureau costs and the cost of a 'circle host'.