HomeBuy "affordable alternative" to Bank of Gran
DON'T worry if you can't dip into the Bank of Granny and Grandpa
− shared ownership offers a really affordable alternative for
That's the upbeat message to frustrated homebuyers from
Hall, Sales and Marketing Director at Bromford
She's responding to a report highlighting the financial squeeze
that faces many younger people who can't afford to put down a full
mortgage deposit without help from the so-called Bank of Gran and
According to the report*, there's been a "staggering increase"
in the number of grandparents who are using equity release -
borrowing money based on the value of their own homes − to lend or
give cash to loved ones.
And one of the most common reasons is cited as helping grown-up
children and grandchildren buy a home − with the average amount of
equity release said to be around £50,000.
Five-figure sums like that are needed by many first-time buyers,
explains the Bromford Homes property expert, at a time when many
traditional mortgage lenders are being ultra-careful and requiring
a deposit of at least 10 per cent.
"With an average house in the Midlands costing anything up to
£200,000 or more, that means first-time buyers are having to come
up with a deposit of say £20,000 − and it could be more depending
on their household income," said Bev.
"Shared ownership is a really affordable alternative for
first-time buyers. It allows people to buy anything from 25 per
cent to 75 per cent of a new home and get that all-important foot
on the property ladder without having to find a really huge
"It's made the difference for many, many first-time buyers and
yet, in some ways, you could say that shared ownership is one of
the property world's best-kept secrets."
Bromford Homes offer buyers the chance to buy between 25 and 75
per cent of their home through their HomeBuy shared ownership scheme and to
pay subsidised rent on the remaining share. Buyers can increase
that share through a process known as staircasing and even buy
their home outright when − and if − their finances allow.
"Shared ownership was designed to help aspiring homebuyers on
lower or middle incomes − people who wouldn't normally be able
to afford a traditional mortgage," said Bev.
"That's still the case but now we're seeing a change in the
demographic of our shared ownership buyers. More of those buyers
are people who, before the credit crunch, would probably have been
able to buy outright.
"Now, with the housing shortage and consumer credit squeeze,
that is no longer possible − unless, of course, they can make a
withdrawal from the Bank of Mum and Dad or, as the report suggests,
the Bank of Granny and Grandpa.
"These are typically young working people who can afford the
five or ten per cent deposit for a 25 or 50 per cent share in one
of our shared ownership homes. People that are more likely to
progress in their careers, to increase their earnings and to
staircase their share and even to buy outright.
"When any buyer comes to us, we go through their finances with
them and work out what they can really afford.
"Long-term affordability is a key issue. Personal circumstances
change if they do Bromford will be understanding and will work with
anyone who finds themselves in financial difficulties."
Bromford Homes is now selling homes for outright sale as well as
shared ownership. The development at Priorsleap, Telford, is a
first venture into the outright sales market for Bromford Homes,
part of Bromford Group, one of the leading providers of affordable
housing and support services in Central England.
* The report, from equity release firm Key Retirement Solutions,
says that the level of people taking out money from their homes to
help family members rather than for other reasons is up from 23 per
cent to 31 per cent, according to The Daily Mail. The average home
value is quoted as £201,150 and the average equity release as
08 August 2012