NatWest has become the latest lender to offer shared ownership mortgages to borrowers who need help climbing the property ladder.
Shared ownership offers people an affordable way to buy a home because they can buy part of a property and rent the rest.
Over time, the homeowner can “kick the bucket” and purchase a larger stake in the property.
The idea is that when purchasing a portion of the property, the buyer will require a smaller down payment and will be assessed for affordability based on a lower loan value.
NatWest said the shared ownership mortgage would allow customers to finance purchases with a minimum share of 25%, while paying rent on the part of the home they do not own.
It comes after the launch of NatWest’s Family Backed Mortgage in April, which allows customers to increase the amount they can borrow by combining their income with the income of a family member or friend.
And it is being launched as NatWest also revealed it was improving lending criteria for customers buying new-build homes and taking out interest-only mortgages.
Starting today, mortgage customers purchasing new construction will have access to 90% loan-to-value (LTV) loans for apartments and 95% loan-to-value for homes.
NatWest will also increase lending limits for interest-only mortgages from 50% to 75% when selling the property is the main repayment strategy, and from 75% to 80% when other investments are the repayment strategy.
To qualify for interest-only loans, customers must earn at least €75,000 individually or €100,000 as a couple.
Lloyd Cochrane, head of mortgages at NatWest Group said: “We want as many of our customers as possible to be able to buy their own home. Today’s launch of shared ownership mortgages means we are offering more choice to customers thinking about the ways they can get onto the housing ladder.
“We have also made improvements to our lending criteria, allowing customers to purchase a new-build apartment or home with a lower deposit. Together, these changes mean we can bring the dream of home ownership within the reach of more customers more quickly.”
The shared ownership mortgages will be available to customers making new purchases and refinancing, including tiered scenarios. Shared ownership mortgages will initially be offered exclusively through mortgage brokers.
NatWest’s shared ownership loans are not linked to any individual NatWest product and are available on mortgages such as loans up to 95% on new builds and the green fixed rate option.
Mortgage customers with shared ownership can also apply for an additional loan (ADBO) after six successful mortgage payments. Additional borrowing will initially be limited for stairwell purposes only.