New mortgage firm, StrideUp, has announced plans to target the UK’s first-time buyer affordability crisis with a mortgage plan offering up to six and a half times income to prospective homeowners.
StrideUp has completed a funding deal for up to £280m and also launched a strategic partnership with specialist real estate debt investment manager, ARA Venn.
The firm’s entry to the market comes as average first-time buyer deposits have soared 16% in two years to £53,935, while record inflation at 9% and the cost-of-living squeeze is forcing buyers to save for longer.
Rising house prices have outstripped incomes, meaning the average price to earnings ratio for first time buyers is 6.9x, a level significantly above the financing attainable under a traditional mortgage, a cording to data from Halifax.
StrideUp is launching a new shared ownership mortgage product which would see prospective buyers only need a 10% deposit to buy in partnership with StrideUp and make one monthly payment covering repayments and rent, enabling them to effectively borrow six and a half times their income.
The prospective homeowner would be able to buy up to 80% of their new home including the deposit and rent the remainder until they are ready to acquire more. The value of the remaining 20% is frozen at the purchase price, enabling them to buy the rest at the same price even if house prices rise. However, on the 20% share, any losses from house price falls are shared with StrideUp.
The firm’s co-founder and CEO, Sakeeb Zaman, commented: “StrideUp’s mission is to build a more affordable and accessible way for first-time buyers to get on the housing ladder and that has never been more relevant. With surging house prices and constraints on traditional mortgage lending, deposits are often falling short, and at the same time people are spending more on rent and living costs.
“With this new funding deal, StrideUp is uniquely positioned to offer a genuine alternative. We’re excited to be partnering with investors who share our vision of building a fairer and more accessible housing market.”
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