New scheme promises affordable homes in Edinburgh

Buyers despairing of ever affording a home in Edinburgh are being offered an exciting and affordable proposition in a new scheme currently being marketed by Savills. Upper Strand, by renowned developer Places for People, Upper Strand is a luxury flatted development overlooking the Firth of Forth in Granton, on Edinburgh’s waterfront.

Places for People is offering buyers a five year interest-free loan on 25% of the price of the flat. This is made possible by the developer raising a second charge on the property behind the principal mortgage lender’s loan, and is now available to buyers who reserve and are ready to move into their dream home by the end of March 2008.

Colin Rae, Places for People development director for Scotland, said:

“The cost of buying a home in Edinburgh has become increasingly unaffordable for many people and our research has shown us there is keen demand in the marketplace for this type of equity loan product. The scheme has been designed specifically to give people the chance to buy a home that they otherwise could not buy outright due to current high market prices.”

Effectively, therefore, the scheme reduces the housing finance-related loan by 25 per cent for the first five years, allowing the purchaser to – for example - buy a three-bedroom home for the outgoing cost of a two-bedroom home. This may also save the purchaser more cash at a later stage when the family is seeking a larger home and would have to meet fees and stamp duty costs of the purchase of a new flat.

Mark Coulter, of Savills, said that the Equity Loan scheme differed from Shared Ownership because there was no rent to pay and the purchaser would own the property outright.

“And there are further benefits to the scheme,” he said. “For example, in years six to ten, interest payments start at 3.25% with the rate after ten years reverting to the Bank of England’s base rate plus 1%. At current rates, that would work out at 6.75%, and with an anticipated interest rate reduction to 5.5% in a month’s time, this would generate a competitive mortgage rate of 5.5%.”

Finally, the customer can redeem or partially redeem the equity loan at any time. However, the minimum redemption must be 10%.

Prospective homeowners at Upper Strand who wish to purchase their home outright at time of reservation and move in before the end of March 2008 have two further, quite separate options. They can choose £650 per month paid towards their mortgage for 24 months or they can take advantage of the Home Exchange scheme, which allows purchasers the freedom to either upsize or downsize whilst saving them time, money and the inconvenience of selling their home themselves.

For more information, visit Savills.com.