The lender Even has been set up as a new business venture by the founders of the online estate agency Nested with an aim to specifically help out first-time buyers by helping them raising a deposit and also by being more generous with income affordability. The new initiative will act in a similar way to the existing help to buy scheme which has been running since 2013 through the government’s homes England division.
For those of you who aren’t familiar with help to buy, the scheme essentially offers first time buyers the option of an equity loan from the government towards purchasing a new build property. The government help to buy agent will provide the new buyer with a loan between 20-40% of the value of the property they are buying (depending on the area of the country – London is a 40% loan) In order to use help to buy, you need to put down a minimum of 5% of the property value down yourself as a deposit and you would also need to secure a mortgage on the other 55-75% of the property value. You will then have the loan for 5 years interest free and after the 5th year the loan will start to incur interest until you pay it back.
“Maximum of £100,000 contribution”
Since 2013 the help to buy scheme has enabled a gigantic number of buyers to get their foot on the property ladder however the current scheme is due to run until 2023 before being phased out. The new scheme from Even is a little different. Even have said that they can lend up to two times a buyer’s deposit towards a house purchase capped at a maximum of £100,000. Instead of charging interest on the loan as help to buy does, Even shares the increase, or decrease, in property value when the customer pays back the loan.
The share is calculated based on the initial contribution of both parties. For example, a contribution of £10,000 by the buyer and £10,000 from Even means any subsequent profit is split 50/50 upon repayment. Before you say anything about what if the value of the property increases significantly, the scheme features a profit cap of 2x the initial loan if paid back in 10 years, or 3x thereafter. There is a maximum cap of 40-year mortgage term.
Even’s co-founder James Turford has said: “We spent two years researching the pain points for those struggling to get on the property ladder. What came out loud and clear were two things: People are tired of being stuck in the rent trap, paying off their landlord’s mortgage while being unable to save because of constantly rising rents. And they want a fair alternative to the state-run Help to Buy scheme and which is being phased out in any case. Even wants to get people onto the property ladder, but most of all, do it fairly.
That’s why, as well as sharing the profit when the property is sold, and charging no on-going interest, we will also share the loss if the property has gone down in value when you sell. In addition, we have a profit cap on our share, so the owner stands to benefit significantly more than us from big rises in value.”
So, if you or someone you know is looking at purchasing their first property and don’t know where to start, give our team a call on 02088771169 and we will be more than happy to help.
