Shared appreciation mortgages 'could provide first step on property ladder'

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Shared appreciation mortgages 'could provide first step on property ladder'

Fri 28th Sep 2007

Shared appreciation mortgages can be a good choice for first-time buyers or those with adverse credit, it has been claimed.

Mike Pendergast, a spokesperson for Zen Financial Services, said that shared appreciation mortgages are "new and quite useful".

In a shared appreciation mortgage, a bank will typically provide a 25 per cent advance on the value of a property, interest free. In return, the bank receives 75 per cent of the appreciation on the home when the owner sells it or dies.

Mr Pendergast commented: "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.

He added that first-time buyers and those who live in "particularly" expensive areas could benefit from these types of home loans.

Shared appreciation mortgages were introduced by the Bank of Scotland in 1996.

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