Unmortgage scheme branded “almost unworkable”

Jessica Nangle

August 15, 2019

asking prices

Industry stalwart Terry Pritchard has criticised a new scheme which allows homeownership without the need for a mortgage claiming it is “almost unworkable”.

Originally reported by The Sun the new scheme, run by Unmortgage, allows first-time buyers to buy a share of a property without a mortgage and pay rent on the rest.

Terry Pritchard, director of Charter HCP, believes the scheme has restrictions: “Obviously any scheme that helps people into the housing market has its merits, however, on first sight this model looks cumbersome, complicated, and almost unworkable with many of the restrictions being deal breakers.

“I suspect whoever designed it clearly has little knowledge of the mortgage market or it was badly researched.

“Maybe the next version will be an improvement.”

Unmortgage has partnered with Allianz Investors to run the scheme from July.

To benefit from the scheme, first-time buyers will need to be looking at properties costing at least £250,000.

A further requirement is a payment of a 5% deposit at a minimum of £12,500, with the maximum deposit being capped at 20%.

The prospective homeowner will also need to earn a salary between £30,000 and £100,000 before tax whether it be a sole person or with another.

Following qualification, the first-time buyer is appointed a funding partner who provides the rest of the funds and the homeowner provides rent to this partner monthly.

Rent is calculated by comparing properties of similar value in the area, and the deposit is deducted from the monthly repayments.

Deposits are held with a conveyancer, and the scheme allows the first-time buyer to be the effective owner of the property despite making monthly payments.

Homeowners have the option of buying 5% of the home annually up to a maximum of 40%.

Unmortgage argues that once a homeowner reaches 40% they predict a person will either buy out the rest of the property or pursue a mortgage.

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