A new high LTV mortgage from Ecology Building Society aims to help more first-time buyers struggling to step onto the property ladder.
The mutual’s Affordable Local Homes mortgage is designed for buyers of affordable properties through the Discounted Market Sale scheme. The fee-free product has a variable rate of 5.54% and is available up to 95% LTV.
Less well-known than shared ownership, Discounted Market Sale homes are properties discounted in perpetuity to act as a stepping stone for first-time buyers.
They’re also only available to local residents, ensuring people can stay in their local areas.
However, restrictions on such homes, while helpful to buyers, put off many mainstream lenders from offering mortgages on them.
Ecology’s Affordable Local Homes mortgage has an extended maximum term up to 35 years, no application fee or ERCs, as well as unlimited overpayment options.
The Society also has cut its stress test rate to 1.75% to offer a further solution to affordability challenges.
Daniel Capstick, Ecology’s senior mortgages product and proposition manager, said: “Most lenders are unwilling to offer home loans on properties with residence restrictions so this lack of mortgage choice risks locking first-time buyers out of housing schemes created to help them.
“That’s particularly true of schemes aimed at enabling purchasers to stay in their local area where they have ties to family, friends and work.
“At Ecology, we believe being able to preserve these local links is an important part of building and maintaining sustainable communities, so we wanted to create a new product with a competitive rate to make it easier for more people to stay local as they step onto the housing ladder.
“Our Affordable Local Homes mortgage is designed specifically to support buyers of Discounted Market Sale homes, whether that’s through Government schemes like First Homes, local authority projects subject to section 106 agreements, or community-led schemes by groups such as Community Land Trusts.
“This section of the first-time buyer market is growing, but currently under-served by lenders, so we’re asking more mortgage providers to follow our lead and look at how they can support this customer group.”
