'Share to Buy', the creation of Britannia Building Society and specialist intermediary graduate network, enables up to four young professionals to club together and purchase a property at a multiple of three times each of their salaries. For example, four young professionals, each on salaries of £24,000 p.a., could afford a property worth up to £320,000. Given a 10%
deposit between them, this would currently give each individual monthly repayments of £435.72 per month, on their £72,000 share of the mortgage*.
This is not too dissimilar to the amount that an individual in London would pay in rent every month.
Key points
* Up to three times each of up to four salaries
* Available to graduates and / or young professionals
* Each individual earns equity rather than pouring money down
the rental drain
* Free comprehensive legal agreement drawn up between all
parties as part of an all inclusive mortgage package
* No early repayment charge/penalty
* Only available as a capital repayment mortgage
* Life and critical illness cover put in place to the value of
each participant's share of the property (non compulsory)
* Accident, sickness and unemployment (ASU) protection cover
put in place, sufficient to cover each participant's share of the mortgage
payments (non compulsory)
* Administration and arrangement fee free
* 90% LTV available
* Available online only through www.sharetobuy.com
With the average London property costing £251,368 an individual would need to earn a salary of £68,228 - twice as much as the average salary in London of just £33,118. As a result, Londoners are relocating further away from friends and are commuting ever longer distances as they move further away
from their City jobs.**
Tim Franklin, managing director of Britannia Building Society, comments:
"With many graduates and young professionals having built up sizeable debts as students, we are seeing a real influx of twentysomethings to the big cities, drawn by the prospect of a sizeable salary.*** But, even with a sizeable city income these young people are struggling to purchase a home at big city prices, particularly with student debts to clear. With many young
people feeling that rent to a landlord is money down the drain, it is becoming more acceptable for friends to club together in order to purchase a property.
"With Share to Buy, not only do we offer young people the opportunity to buy their own share in a property, the first time ever that this has been offered by a lender, but we also provide them with their own free comprehensive, essential legal arrangements as part of the whole package."
Stephen Dwelley, managing director of graduate network, added:
"Not only are we offering a salary multiple that can significantly boost the affordability of first time buyers, but our free legal agreement provides a sound basis upon which friends can buy property together, covering the important concerns such as what happens in the event that one of them has to move out"
"Overall, we aim to offer an acceptable way in which young professionals can get a stake in the property market at an earlier age than is currently possible."
* This example is calculated on a repayment Share to Buy Tracker mortgage of
£288,000 on a purchase price of £320,000. Current Share to Buy Tracker mortgage rate is 5.35% (Bank of England base rate plus 0.85% for the lifetime of the mortgage). APR is 5.5%, variable. LTV is 90%. Please note this example does not take into account stamp duty charges which would equal £9600.
**Research by the London Housing Federation. Mortgage based on 95% LTV and 3.5 times single salary
***Figures from latest Census 2001
