Part Buy Mortgages
In recent times, part buy mortgages have surfaced to help people place a foot on the property ladder, namely the first time buyer or younger generation who have grown up in times where property prices have spiked and may not be able to afford to buy a house outright.
So What Are Part Buy Mortgages?
When you part buy a property, you are doing exactly what it says on the tin. You are buying a share of the property which can usually range from 25% to 75% ownership. As the buyer, you’ll arrange a mortgage as normal to cover your share of the property and you’ll also pay a rent to the owner of the rest of the propertly – Usually a landlord or housing associations.
Housing associations offer various schemes for first time buyers so it may be worth double checking with your local association for an incentive that suits you.
What usually happens from here is that you are given options on your home – Normally you’ll have the oppurtunity to buy the house outright or gradually pay to gain larger shares of your property as your finances allow. Using the latter method is known as ’staircasing’.
You’ll have many different types of mortgages at your disposal with part buy mortgages just as you would with a standard mortgage agreement. You have stated income (or self cert) part buy mortgages, variable rate, fixed rate as well as many others. There were even 100% part buy mortgage lenders but these are now quite rare and a deposit is often required, even if you are part buying a home.
As always, what kind of deal you’ll get depends on many things such as how thoroughly you research and find the right lender for you or how much of a deposit you are initially paying – Not forgetting that the percentage of equity you plan to own will also come into play!
Overall, part buy mortgages are a fantastic way to get a foot on the property ladder for the first-time buyer but they become better deals the bigger percentage of equity you own as you’ll be wasting less money on paying rent to the landlord and instead putting more towards your actual mortgage and property.
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