Basically they’re creating a new type home co-ownership model, where they buy the majority of a house, you buy a small proportion of it, then you pay them rent on their share. You can buy out more equity in the house anytime, from as little as £1. Would make sense for people who are priced out of buying in their area, so you can sort of part-buy and then gradually acquire more of the property over time while reducing your rent
They still require a 5% deposit. This just looks like an advanced fin-tech version of Shared Ownership staircasing, which is already a thing.
Speculating, they may be able to use a larger buying power to secure bulk properties from developers, which they can then offer to market (Unmortgage customers) at market rate, therefore making a profit in the early stages. Should the customer wish to sell, then presumably they will need to consent to Unmortgage having first refusal on buy-back. (We had similar terms when we bought Shared Ownership 8yrs or so ago, where the association have ‘first refusal’ on buy-back (in reality, they find another buyer), and if nothing achieved within 3 months, it’s allowed to go to open market.
Assuming house prices continue to rise with inflation, then they also profit at the back end on completion of sale.
This actually looks like a great business model (for them).
Nothing wrong with doing so, just if you owned the freehold similar to how you would with a traditional mortgage it would make it more attractive than shared ownership, which is similar but you never really own the freehold
Does the freehold vs leasehold matter than much? The thing that matters to you and to Unmortgage is that the property increases in value (or rather that it doesn’t decrease). You’d imagine that any gains or losses are split according to the % share that you each own
But that works the same for leasehold and freehold
Exactly. The big advantage of this (speaking as a Shared Ownership owner) is that you can increase your share any time from £1. So if you get a £500 bonus at work one month, just shove it straight into the property and reduce your rent payment accordingly.
Government shared ownership is very expensive and slow to staircase because you need an independent surveyor each time
To me? Personally yes, i’d only ever buy a house where it was freehold and I owned that freehold. Flats of course are different and you really only get flats that are leasehold or some shared freeholds
True, if it was a house you’d want it to be freehold. They don’t seem to give much away about whether they’re planning to focus on houses, flats or both
Absolutely, see the customer benefit and it’s an attractive proposition.
There are alternatives to the government’s shared ownership scheme, they have been a staple of building societies for a while and staircasing is far more straightforward.
I can see additional benefits to the Unmortgage proposition for those who may struggle to fit other lenders criteria for a mortgage, those financial checks may be easier to pass when applying a ‘mortgage’ on 10% and renting the remainder.
This sounds really good to me as it means I can buy a house I actually want rather than buying one I can afford. The only thing I would be worried about it the ability for them to kick me out for some reason or another or force me into selling my share so they can take the property. I’m sure theres probably laws and regulations on this but it definitely looks worth looking into.
I imagine I’m their target market too as I can easily afford rent but can’t yet get a mortgage that’s affordable with the size deposit I have.
Only being able to “pay off” 5% of the property value PER YEAR, would put me straight off (unless I’m missing something).
The reality is, it would take you years to fully own the house, and if you sold it before hand, you’d obviously only take a percentage of the increase in value (assuming it does increase of course).
I’d say that for people struggling with the initial deposit, perhaps the governments help to buy option is better (whilst not great itself, and is more limiting, it could be a better alternative for some).
But, if unmortgage help a few people get on the ladder, super!
