A stepping stone between renting and owning
Launching in early 2019, we will see an innovative approach called Unmortgage which will help people progress towards home ownership as they rent.
It is a step on from normal co-ownership schemes in that you can gradually buy your home with payments over and above the rent. Unmortgage is for people who can afford to rent, but want to own. You might not earn enough to get a mortgage on a property you love, or renting might be stopping you from saving enough of a deposit. Think of Unmortgage as a stepping stone between renting and owning.
With as little as a 5% deposit you and Unmortgage buy your home. This is not a loan or a mortgage, this is co-ownership. You put in your deposit, their partners buy the rest.
Each month you’ll have the opportunity to buy more of your home. From as a little as £1 a month, up to a maximum 5% of the property value each year. Any overpayments you make on top of your rent, will go directly towards increasing your ownership, thereby reducing your monthly rent.
It’s your home, so you’re in control. You live in it, pay rent, and make it your home - without the risk of being told to move on. You decide when and how you want to exit - including rolling over to a mortgage.
Market rent is set by assessing similar properties in the local area using local property data and setting a fair market rent. You will only pay rent on the portion you don't own. For example, if you own 10% of your home, you only pay 90% of market rent.
It's an interesting model which could help more people progress towards owning their own home. I'm sure if it gains traction we will see many similar schemes launched.
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Geoff Knott, 31/10/2018