New Mortgage for First Time Buyers Offered by Morgan Stanley

richdeniro

Apologies if there is already a thread.

Seems like quite a good scheme and I shall be looking into this over the next few weeks.

Any mortgage guru's out there have any thoughts?


http://business.guardian.co.uk/story/0,,1834244,00.html

Bank launches profit-share mortgage

Charlotte Moore
Monday July 31, 2006
Guardian Unlimited


Morgan Stanley said today that it has launched a new product to help first-time buyers who find themselves priced out of the property market.
The product, known as Flexishare, will allow homeowners to borrow more than they can get from traditional lenders. In return they will have to give up some of the future increase in the value of their home.

Similar government-backed schemes already operate but they are restricted to key workers and low-income families.

Flexishare, which is being sold by the investment bank's new mortgage arm, Advantage, is available to anyone who cannot borrow enough from conventional lenders to buy the property they want.
Most conventional mortgage companies only lend people around three to four times their salary and up to 100% of a property's value.

Flexishare offers a standard mortgage of up to 80% of the property price and a "residential ownership loan" of up to 35% of the home's value, at a lower interest rate.

Borrowers need to put down a deposit of at least 5%, but the scheme means they can buy a property even if they can only raise 60% of the purchase price on their income.

In return Advantage shares any increase in the value of the property, based on the size of the residential ownership loan.

If the loan is 15% of the property and the value has increased when you come to sell, Advantage gets 15% of that increase. If however the value falls, the amount you have to repay on the loan element decreases.

The government welcomed the launch and said it was hoping to encourage more private companies to develop homeownership schemes aimed at families who had been priced out of the market.

The housing minister, Yvette Cooper, said: "As house prices have gone up, more and more families who could keep up with regular mortgage payments can't manage that first step onto the ladder."

UK007BullDog

Hmmmm......

Personally I dont like any of those shared shemes because of all the restrictions. I like to be free and know people all want to be free, and some of those shared shemes are so limiting and then selling as well could be a problem later on as well (keyworkers) that I really dislike them. However we get more and more people asking to help get on them.

Cannot say anything about this one as yet as I would have to read the small print first of all. The one thing which immidiately made me shudder was the mentioning of having to give up part of the gain in value. That is something that needs investigating.

A lot of lenders are available more and more to help FTB like Northern Rock and I would recommend them often if it were not for their super high charges.

It sounds good but anything the government has cooked up needs to be vetted, so will look at it in a couple of weeks once we get the full nitty gritty on the product.

MortgageMamma

This is currently being discussed on the mortgages and endowments board. I don't like the look of it and I won't be recommending it to any of my clients for a variety of reasons, but mainly because I feel it iwill assist in keeping property prices unattainable for FTBS, and your average client just would not under stand the concept. Plenty of scope for alledged "mis-sales" for clients that do not pay attention to what they are being told!

Anyway enough of my ranting here's the link http://forums.moneysavingexpert.com/showthread.html?t=239409