A new gifted deposit scheme launched to help first-time buyers is being made available through estate agents.
It involves sellers matching the first-time buyer’s 5% deposit, so that altogether the buyer has a 10% deposit, as required by most lenders. It is reliant on agents bringing together the right buyers and sellers, and on lenders accepting the 10% deposit as a genuine desposit.
The ‘5&5’ scheme has been launched by independent mortgage broker Obligo.
Agents bring buyers with a 5% deposit together with motivated sellers who are prepared to gift the buyer the extra 5% required in return for a reasonable selling price, with no chain involved and a quick sale. Halifax is among the lenders accepting the scheme as a 10% deposit, rather than simply a reduced price.
The scheme is currently being rolled out in a number of estate agencies around the UK, including Liverpool-based Andrew Louis estate agents and Fortis Properties in Cardiff. A number of 5&5 sales have already been completed.
Vendors who wish to opt in to the scheme instruct the Obligo partner agent to sell their home. The seller then matches the deposit with 5% of their own equity (no cash required). Next, the buyer takes out a mortgage, with help from Obligo, to secure their property.
Chris Gardner, director of Obligo, said: “Brokers and agents have a choice. They can sit around and wait for the market to come back – and good luck to them – or they can innovate and work together to find solutions and drive sales. We fall very much into the latter category.
“The 5&5 scheme is turning prospective buyers into buyers, which is what agents and brokers want to see. It’s a great example of brokers working with agents to take control of the market rather than be dictated by it.”
Louis Anastasiou, of Andrew Louis estate agents in Liverpool, said: “The 5&5 scheme is helping the first-time buyers of Liverpool finally get on to the property ladder, as it gives them the necessary deposit and makes homes much more affordable.
“At the same time, in what can be a stagnant market, we are giving vendors who may be having trouble selling their homes an opportunity to do so. As well as facilitating sales, it has been great at driving footfall and enquiries.”
There are currently around 50 estate agents partnered with Obligo of whom several dozen are expected to be offering the new FTB deal within days.
Comments
Great article with some interesting points!
@Ray Evans
I think that you're dead right. At a first glance it seems fair enough but......
The scheme is only for new builds. New builds are not involved in any chains.
Therefore potential 10,000 more FTB's will be removed from the bottom of housing chains. Say an average of 5 houses per chain thats up to 50,000 homes not able to proceed this year. There are less than 60,000 houses sold per month currently.
This is also an incentive for developers to increase housing supply.
Either the policy makers know this and are helping the market to deflate, or are ignorant to the effects of this policy.
Who's going to buy my house if FTB's are all being bribed to buy new build?
Gavin: "If some one can't sell they will just have to drop their price till it becomes affordable."
OR just stay where they are...
OR rent it out until their required price becomes achievable ...
OR - awww... you get the picture. More than one way to skin YOUR particular cat, Sir!
Gavin, its allowed by several lenders, including halifax and nationwide (although with nationwide limited to 85% ltv) as long as the valuer is aware. get your fact straight.
RE Richard "Pathetic, how can anyone be negative about a positive initiative? Astounding, but then thats some stupid peoples mind set."
Who says it is positive? Gift deposits are just a fraudulent way to prop up house prices and rig land registry figures in the area. Banks caught on after the credit crunch and they pretty much died out.
A positive initiative would to be to do nothing allowing higher interest rates and let the market correct it self. If some one can't sell they will just have to drop their price till it becomes affordable.
Good on Obligo for having a go - yes vendor deposits are not new, but if Obligo have a lender on board and its being done properly then its good for the market.
Budget Day:
Financial help for FTB's to purchase NEW a property ONLY.
Good fro them and for the developers - but, as some pundits are already saying, 'kick start' the Housing Market as a whole? Just the opposite methinks!
What do others think?
WOW!! Just two days ago I ststed that look4aproperty had disappeared from our screens without trace - and look what jumps out of the woodwork.
I Caant believe it!
Looks like I'm in for another scrap with that lot, dunnit...?
Still - makes a welcome change from HPCers or Realising Reality I suppose...
BRING IT ON!!
Pathetic, how can anyone be negative about a positive initiative? Astounding, but then thats some stupid peoples mind set.
This is nothing new. It’s been around for donkey-years, it just seems to have been forgotten by the wider range of brokers. I find it incredible that brokers aren't thinking out the box with their business and utilising the tools that they have to get the sale completed. However, if we all start broking deals like this for the FTB market then it's a sure way of getting the proprty market the kick-start that it needs.
This is seriously good news for the market.
To have a lender being bold enough to support the second hand market with a 100% LTV loan is a solid move to help get the market kick started.
I'm going to register my interest with look4aproperty.com right away!
THIS IS RUBBISH!!!
**** HOT OFF THE PRESS ***
LOOK4APROPERTY.COM are about to launch a 100% LTV cheap rate mortgage.
I've registered my interest with them.
this looks like a clever marketing stunt from a mortgage broker, but it makes a change to see a broker trying to do something rather than moaning and groaning. We have done vendor gifts before but not at this kind of LTV. anything that gets ftbs going has got to good for the rest of the market