New Interest-Free FTB Lender To Divide Home Price Profits At End Of Term
“In addition to sharing the profit when the property is sold and not charging any ongoing interest, we will also share the loss if the property has fallen in value on the sale.”
‘Even’ is inspired by buying aid and aims to increase the budget of first-time buyers up to Â£ 100,000. It will focus on the second-hand market, which represents 85% of first-time purchases. The loan aims to solve the problem of low deposit and loan / income ratios often encountered by first-time buyers.
Instead of charging interest, Even shares the increase or decrease in the value of the property when the customer repays the loan. The share is calculated on the basis of the initial contribution of both parties. For example, a contribution of Â£ 10,000 from the buyer and Â£ 10,000 from Even means that any subsequent profit is split 50/50 upon repayment.
Even offers no interest for the entire term and shares the profit or loss on repayment, and the owner retains the profit from the structural work undertaken.
It has a profit cap for Even of 2x the initial loan if it is repaid in 10 years, or 3x thereafter.
Nested, Even’s parent company, has raised Â£ 45million to date and aims to use the funds to develop Even as a viable alternative to Help to Buy for those who want non-new builds.
Even plans to start offering loans by the end of 2021.
Even co-founder James Turford commented: âWe’ve spent two years researching the pain points for those struggling to get on the property ladder. What came out loud was two things: People are tired of being stuck in the rent trap, paying off their landlord’s mortgage while being unable to save because of constantly rising rents. And they want a fair alternative to the state-run purchasing assistance program which is being phased out anyway.
âHe even wants to get people up the property ladder, but most of all, do it fairly. Therefore, in addition to sharing the profit on the sale of the property and not charging any ongoing interest, we will also share the loss if the property’s value has declined on the sale. In addition, we have a profit cap on our share, so the owner will benefit much more than us from large increases in value. “