View more on these topics

Flexishare Up The Property Ladder

Non-conforming mortgage specialist Advantage, part of the Morgan Stanley Group, has brought out two mortgages under the Flexishare home ownership plan.

Flexishare is a hybrid of a conventional mortgage and a shared equity scheme that is designed to enable first-time buyers, key workers and young families to get on the property ladder. It is available for loans up to 95 per cent of valuation and comprises three parts.

One is a conventional two or three-year stepped fixed-rate mortgage for up to 80 per cent of valuation. The second part is a lower fixed rate residential ownership loan for 15-35 per cent of valuation, which is fixed at 2.99 per cent for the life of the loan. Together, these parts produce a lower blended mortgage rate, enabling the borrower to increase their purchasing power.

The final part of the mortgage is the Advantage share. The lender will take a share in any increase in the value of the property at the same percentage as the second part, the residential ownership loan.

For example, if the mortgage is taken out to buy a £100,000 property, the borrower’s deposit will be 5 per cent of this – £5,000. The conventional mortgage part could be £65,000, which would then mean the residential ownership loan would be £30,000. If this property was subsequently sold for £125,000, the borrower’s equity would be worth £22,500 and the lender would have a £7,500 share in the property. The repayment of the conventional mortgage part would remain at £65,000 and the residential ownership loan would also remain the same at £30,000.

The benefit of this type of arrangement is that overall, repayments should be lower than a conventional deal as part of the loan is fixed at a lower rate for life. The lender will only have a share in the property if it is sold at a profit, but this profit will always be less than the borrower’s share of the profit.
This is an innovative product, which could be useful in enabling people to get a foot on the ladder, while still allowing the lender to profit. However, it is more complicated than a conventional mortgage and borrowers will experience a jump in repayments due to the stepped rates, particularly as these apply to the biggest percentage of the loan.


‘FSA and FOS should be dismantled’

The FSA and Financial Ombudsman Service should be dismantled and the Financial Services and Markets Act repealed, according to the IFA Defence Union’s submission to the Tory’s economic competitiveness review. The IFADU was asked by Tory MP John Redwood to submit a paper as part of his group’s review of economic policy, which is set […]

CML attacks Hips and calls for Government re-think

The Council of Mortgage Lenders says Home Information Packs will not work in their current form.The trade body, which has previously been cautious in its comments on Hips, launched a broadside at Government policy in stating the controversial packs, which it labels as a “costly indulgence”, will be useless in aiding the home-buying process.The comments […]

360 Warning of identity fraud

360 is warning advisers about identity fraud after three adviser firms and two providers reported fraudsters targeting them by using details found at Companies House.

Converting pension savings to a retirement income…

Since last year’s reforms to pension legislation, a significant number of retirees have chosen income drawdown over purchasing an annuity. Income drawdown is more flexible than an annuity. However, it also increases the likelihood that individuals won’t be able to maintain their income throughout their lifetime. In this short video, we explain the risks that […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm