Advantage is poised to take the market by storm with the launch of its Flexishare product in July, which allows first-time buyers to borrow up to 6 x their income, split between a conventional mortgage and residential ownership loan.
The innovative move comes just six months after Advantage was bought by US giant Morgan Stanley.
The product will be available on Advantage’s adv-elect website from mid-July and is designed to increase the buying power of first-time buyers, families seeking larger houses and key workers.
Prime borrowers will need to have a minimum 5% deposit but will be able to have between 15% and 35% of the property value tied into a residential ownership loan.
The loan will be fixed at a rate of under 3% for the term and funded by Advantage, which will share in the potential increase or decrease in properties’ future value.
The Flexishare product has already received rave reviews from the industry.
Ray Boulger, senior technical manager at John Charcol, says it’s good to see a lender entering the market in such an innovative way.
He says: “This is encouraging and will give those normally fro- zen out of the market the opportunity to buy property. It’s unusual for a lender to share in any loss as well as any gain.
“Key workers who don’t fit the government’s HomeBuy initiative will be able to qualify for this and it will give them more freedom.”
But Boulger stresses that this product is not for those who can already get a high street loan.
He adds: “If this product is successful other lenders will start to look at offering deals like it and try to achieve the same objective in a different way.”
John Wriglesworth, economist and PR guru, believes the deal will help many make the move from renting to buying.
He says: “There are over one million potential first-time buyers still renting and unable to buy.”
But he also believes it is still responsible to lend 6 x times a person’s income because of the structure of the product.
Keith Dearling, managing director of Advantage, says: “We’ve run several focus groups and believe this product has the potential to change people’s lives.”