Shared appreciation mortgages can give step up, says expert
September 28, 2007
Shared appreciation mortgages could help prospective homeowners make a step up on to the property ladder, one expert has advised.
Independent financial advisor Zen Financial Services says first-time buyers and those with a bad credit rating can benefit from the deals.
A spokesman for the firm stressed that the mortgages do not mean shared ownership, just that the lender takes a share of any profit made from the capital gain of a property.
"Some lenders are being quite creative now and coming up with things like shared appreciation mortgages where, it’s not shared ownership, you still own the whole house, but the lender takes a share in the profit that the property makes," explained Zen Financial Services representative Mike Pendergast.
He continued: "That’s not necessarily for adverse credit, although they would consider that, but for first time buyers as well and particularly in areas where it can be more expensive for first time buyers to get on the market."
The Bank of Scotland offered the first shared application mortgage in the UK in 1996, according to Mortgages Exposed.
Written by Peter Kenny · Filed Under News Mortgages
Hi,
I’m looking for expert advise to fight the Bank of Scotland after misselling my mother a Shared Appreciation Mortgage. The BOS gave her 25% towards the purchase of her house in return for 75% of the appreciation. The 75 % was not mentioned during her meeting with the bank who mentioned only that hey could give her up to 25% of the value of the house. That was 10 years ago now the house has appreciated by £100k where the bank stands to gain £75k for 25% stake in the property – can you help ?
Kind Regards,
Mark Wyllie
Hi Mark – sorry for the delay in responding!
It sounds like your mother had an equity release or Home Equity Plan mortgage. The newer shared appreciation mortgages tend to take a share of a much lower percentage.
Your course of action would be to write to BOS in the first instance and express your concern. If you are not happy with their response, you can then approach the Financial Ombudsman for an independent adjudication.