Persimmon’s mortgage plan helps buyers move on up

A brand new mortgage product, designed exclusively for Persimmon Homes, has launched across Yorkshire. This entirely new product, known as Capital Plan, has been developed for Persimmon’s four-strong group of Yorkshire companies operating from a network of regional offices in York, Beverley, Doncaster and Leeds.

The Persimmon Capital Plan enables a purchaser to borrow up to 97 per cent of a property’s value with the loan split into two portions – the first is a conventional mortgage on a competitive three year fixed interest rate which is available as a capital repayment or interest only loan, while the second portion is classed as a Residential Ownership Loan (ROL), charged upon a fixed interest of just 2.99 per cent for the entire term.

The ROL can represent up to 35 per cent of the purchase value of the property with the balance made up in the usual way - by a conventional mortgage and deposit. As this proportion of the property’s value is on a much lower interest rate, monthly repayments are substantially reduced, giving buyers the chance to buy and own a larger property for less money and unlike shared equity, with Persimmon’s Capital Plan, the property is wholly owned by the purchaser.

Borrowing capacity for the Capital Plan is based on a debt to income ration as opposed to income multipliers applied by conventional mortgage lenders. For instance, for joint applicants with a combined income of £35,000, a high street lender would consider up to four times their joint salaries, or £140,000. With Capital Plan, the borrowing capacity could be as much as £253,000.

Capital Plan enables both the property owner and mortgage lender to benefit from any capital appreciation, sharing in any increase in the value in the same proportion as the ROL represents when the property is sold.

Similar products have historically been restricted to key workers and low-income families however, as house prices continue to rise, more and more people are looking for additional support in getting a foothold on the property ladder.

Persimmon’s Capital Plan has been designed to help all buyers – from first timers looking to take their initial step on the property ladder through to those wanting to trade up to the home they want, or need, at an affordable level.

Capital Plan is being funded by Advantage Innovative Lending, an intermediary lender of Morgan Stanley and is supported by independent mortgage advisors, Gledhills of Northallerton.