London’s Mayor Sadiq Khan, recently hosted the inaugural Homes for Londoners conference highlighting that more affordable homes are needed across every London borough for regular Londoners.
Of course, the government has a part to play but so do Private and Institutional Investors.
Even if the Government met its housebuilding target across the UK, there still would not be enough affordable houses for regular buyers.
To really solve this problem requires the collective effort from everyone.
The good news is that there is indeed a way for Private and Institutional Investors help in this regard, whilst also generating a secure property-backed return on their investment in a relatively short timeframe.
Innovative schemes like MortgageLadder’s rent-to-buy programme might be the way forward.
MortgageLadder helps people who have a good job and a good level of earnings buy a home, even though they have been refused a mortgage by lenders due to:
1. Not having lived in the UK for long enough.
2. Having a credit record that may not currently be in line with high street lenders’ requirements
3. Have no deposit, or one that’s too small to secure a city home.
Using the latest in FinTech, MortgageLadder assesses applicants’ suitability to buy a home within a 3-year digital coaching programme duration. Eligible Tenant-Buyers on the programme are then matched to Investors who finance the home purchase on the basis that the Tenant-Buyer will buy it back from them within 3 years once they’re been made eligible through MortgageLadder’s programme. Each month, MortgageLadder’s programme helps the Tenant-Buyer build both a deposit and credit score to increase their chances of being mortgage-ready on or before the maximum 3-year programme duration.
Before moving in to the home, the applicant puts down a minimum deposit of 2% towards the home purchase. Every month, the applicant also pays a monthly sum – a proportion of which is towards rent and the other portion towards building more equity in the home. Then the applicant pays the investor an agreed amount, a proportion of which is the rent and the other amount is saved towards a deposit.
After three years, that deposit can then be used, along with the good credit record that’s been built up along with a longer period of residency and time in employment, as the basis for the original applicant to buy the home.
How do Investors make money?
Well, there are actually a number of excellent reasons that investors should work with MortgageLadder:
· Investor gets a passive rental yield from the rental income that’s paid each month, which is set around the market rate of between 4-6% for Greater London and often much higher in northern England.
· Investor benefits from capital gains. The Tenant-Buyer buys back the property from the Investor at a pre-agreed purchase price that ensures the Investor makes a reasonable return on their investment – in line with house price changes over the period.
· Totally hands-off. As an investor you can achieve all of this without having to search for properties, manage repairs, maintenance or tenants because MortgageLadder manages every aspect of the process making it totally hands-off for Investors
· It’s a relatively short-term commitment for up to 3 years and earnings can be re-invested in other opportunities in time.
MortgageLadder’s underwriting model ensures that eligible buyers are fully vetted for affordability and the property is still in the Investor’s name until the full purchase rights are exercised by the Tenant-Buyer. We also protect the Tenant-Buyer’s rights with a land registry restriction and secure escrow account for the monthly equity contributions.
If this sounds like the right investment opportunity for you, get in touch with MortgageLadder and we can discuss the details and see if we can work together to help grow the number of city home-owners across the UK.
About the Author
Founder, MortgageLadder. Passionate about all things Property, Finance and Technology. Ex Banker...