A 95% Non-Mortgage House Purchase

There is a new deal out on the market for first time buyers to get on the property ladder.  First time buyers will only require a 5% deposit.

The Mill Group which is a specialist property company has developed a fund which will help time buyers with the purchase of the remaining 95% loan to value, but no mortgage is involved.

The deals are aimed at higher earners of around £50k and above who cannot get a mortgage due the requirement of a high deposit. The home-buyer will not pay stamp duty when they buy their initial 5% of the property.  To be considered the buyer must stay in the home for at least 5 years.  Then between 5 and 7 years the buyer is expected to buy back the fund which provides an exit for investors in the Mill Group Investors in Housing Fund.

If things go wrong – for example, there is a divorce – the fund would buy the entire property, and it might also be possible to extend the exit period beyond seven years.

The buyer would pay a co-investment charge which would compare to mortgage payments that would be paid for a property of that value.

David Toplas, CEO of Mill Group, said: “The deposit requirements for FTBs have reached impossible levels with the average in London exceeding 20%. It’s no wonder they are also on average 37 years old.

“Co-investment aims to bring institutional investment into the market by giving consumers the ability to get onto the housing ladder quicker than saving for these levels of deposit.

“For investors it offers a realistic way of investing in the residential market while earning attractive levels of income and participating in future forecast growth.”