Persimmon Homes has launched a new mortgage product, Persimmon Capital Plan to help home buyers get on or move up the property ladder.
The Persimmon Capital Plan enables a purchaser to borrow up to 97% LTV with the loan split into two portions, a conventional mortgage on a three-year fixed rate which is available as a capital repayment or interest-only loan and the second portion is classed as a Residential Ownership Loan, charged at a fixed rate of 2.99% for the entire term.
The ROL can represent up to 35% of the purchase value of the property.
As this proportion of the propertys value is on a much lower interest rate, monthly repayments are substantially reduced and unlike shared equity the property is wholly owned by the purchaser.
Borrowing capacity for the Capital Plan is based on a debt-to-income ratio as opposed to income multipliers applied by conventional mortgage lenders.
Capital Plan enables both the property owner and mortgage lender to benefit from any capital appreciation, sharing in any increase in the value in the same proportion as the ROL represents when the property is sold.
Similar products have historically been restricted to key workers and low-income families, however, as house prices continue to rise, more and more people are looking for additional support in getting a foothold on the property ladder.
Persimmons Capital Plan has been designed to help all buyers from first-timers looking to take their initial step on the property ladder through to those wanting to trade up to the home they want at an affordable level.
Capital Plan is being funded by Advantage Innovative Lending, an intermediary lender of Morgan Stanley and is supported by independent mortgage advisers, Gledhills of Northallerton.