A North East housing provider has teamed up with a building society to help more renters to get onto the property ladder.
A new initiative with Mansfield Building Society has strengthened Prince Bishops Homes’ innovative Rent to Buy model, with the mortgage lender becoming the first to allow any increased value of a rented home over the period of tenancy, to be used as part of a purchase deposit.
As well as providing flexible housing solutions to meet the needs of first and second time buyers, Prince Bishops Homes ‘Moving on up Scheme’, allows people to rent their home for four years, with the option to then buy it. The developer shares any increase in the value of the property over those four years 50%/50%, providing the buyer with additional funds to be used towards a mortgage deposit.
Previously, most lenders stipulated that customers would need to have saved a minimum of a 5% mortgage deposit – not including these funds - by themselves, to demonstrate their ability to budget and in turn, prove they would be able to manage the monthly mortgage payments.
Moya Jones, Sales and Marketing Director at Prince Bishops Homes, explains: “Not everyone is in a position to rent at full market value whilst at the same save towards their own mortgage deposit. After discussions with a number of lenders, Mansfield Building Society has become the first to confirm that, should the incentive given by Prince Bishops Homes equal the 5% deposit requirement, they can offer a special mortgage product to allow the purchaser to proceed using these funds alone - subject to them meeting the qualifying requirements of course.
“This means that we can focus on helping our customers in becoming mortgage ready. With support from specialist Financial Advisor Colin Barwick of Foster Denovo, we try to help tenants to develop good financial management skills and to be aware of their credit score. By building sound financial awareness, we can enable people to break free from generation rent."
Stephen Walton, National Business Development Manager with Mansfield Building Society, said: “Mortgages for those with fully gifted deposits are not usually available. However, what Prince Bishops Homes is doing here is not a standard approach and we are delighted to be able to support it. After renting a home for four years, most people will understand the cost of running it and will already have the furniture and accessories within – meaning they will not have the associated costs of moving into a new property to outlay.