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Homeownership scheme allows borrowers to buy home at 10 times income

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19/11/2021
The scheme shares features with shared ownership, where the buyer purchases a portion of the property and pays rents on the rest, but it doesn't require a mortgage
Homeownership scheme allows borrowers to buy home at 10 times income

A private gradual homeownership provider said it has changed its scheme to enable people to buy a home at up to ten times their income.

The company, Wayhome, said that a couple with a household income of £50,000 could move into a property worth £500,000.

This compares to just 3.5 times household income typically lent by mortgage lenders to first-time buyers.

Wayhome said its model is mortgage-free and debt-free and rental payments are not linked to interest rates, so there is no risk of negative equity.

How does it work?

Wayhome is backed by institutional investors, like pension funds, which provide the funding to buy properties.

Customers must purchase at least five percent of the home and then rent the proportion they don’t own, at a fair market price. They don’t take out a mortgage but own their portion of the home alongside the other funders.

Crucially, customers can staircase – which means buy a further portion of the property – as often as they like, without any fees.

Nigel Purves, chief executive officer at Wayhome, explained: “Gradual Homeownership is a truly unique product, and that is why we’re the first in the UK to be able to offer people homes worth up to ten times their income, with just a 5% deposit.

“And we can still do this in a 100% prudent, sustainable way – there’s no mortgage debt in Gradual Homeownership, and rental payments are not linked to interest rates, so there’s absolutely zero risk of negative equity for our customers.

“There is a cruel distortion at the heart of our housing market: a person or family might be able to comfortably afford the rent on a particular property – yet a lender decides they can’t afford to buy it. At Wayhome we’re changing this by helping people (gradually) buy the sort of home they could only otherwise afford to rent.”

“With house prices rising more than twice as quickly as wages, its clear the affordability crisis within the UK housing market is only going to get worse. We hope that by offering a genuinely game-changing alternative, we can help thousands more people get onto the ladder, in their ‘forever home’, today.”

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