Post on 03-Mar-2016
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DESCRIPTIONbelgravia proposition brochure
Conservative Party Conference
Helping kick-start the housing market
Capital adequacy and responsible lending issues
have created a market where borrowers realistically
require a deposit as high as 25%. The result is a
struggling housing market. The Belgravia top up lending
proposition is unique in securing a framework for
lenders to share risk and to meet capital adequacy
and responsible lending requirements. It provides
borrowers with access to true, responsible 90% lending.
The scheme is privately funded with over 250m
available double the government allocation. Whilst
supporting home builders in their sales needs, it also
allows them to recapitalise in months rather than
John Lloyd BA (Hons), MBA
John Lloyd 07595953277
Robert Rogers 07914818651
Capital adequacy and responsible lending issues have created a market
where borrowers realistically require a deposit as high as 25%. There are a
large number of 90% loans available and there are great aspirations for 95%,
but the reality is that the banks cannot afford the capital reserves to
substantiate such lending and the FSA demand substantial validation for high
risk lending. The result a struggling housing market.
The current solution is the government-backed shared equity scheme. This
facilitates a sale by offering an equity loan to bridge the finance gap. There
are two issues: the amount of funding required from both builder and
government at this time on the one side, and the open-ended financial
commitment on the borrower, on the other hand. The borrower has no idea
what level of finance they may have to raise in years to come, or indeed,
what their financial position will be at that time.
Top up lending in a new transparent scheme.
10% personal deposit.
This promotes responsible lending. The default rate at 95%
compared to 90% is considerable. This requirement provides
confidence to lenders.
75% first charge loan.
This facilitates good quality low LTV lending. It meets capital
Lender Transparency Document.
A new document & procedure introduced to summarise the
total lending required. This document details both lenders, the
borrowing requirement, the product, the rate charged and the
monthly repayment. This supports the requirement on the lenders
(whilst underwriting at 75% and 15% respectively) to apply an
overall affordability measure at 90%. The document allows both
lenders to communicate under the Data Protection Act.
15% top up loan.
This is offered by the builder on commercial terms. RICS has
confirmed that this transaction does NOT constitute an incentive
and, as such, should NOT be recorded on the CML declaration
of incentives form. The builder holds the loan for a minimum of 3
months. This provides a payment profile before sale. The builder
sells the loan on commercial terms in month 4, assuming the first
3 monthly repayments have been received. The loan note is sold
at a discount of 33.3%, offering an excellent return for the
investor and an immediate recapitalisation for the builder. The
33.3% discount is similar in cost to the builder to 5% of the
Costs: The top up loan is a fixed loan of 15%. The amount repaid is fixed at
20%. The repayments are fixed. The duration of the loan is fixed (10
years). There is an administration fee for the top up loan (maximum
275+vat). There will be a range of first charge products offering fee-
free or lower rates.
Example: 100,000 purchase price, 15% loan = 15,000, amount repaid
20% = 20,000 over 120 months 166.66 per month.
Mortgage Sale Agreement:
The lenders and builder will sign up to the MSA in advance. Firmly
entrenched in this agreement are the arrears management protocol
and loan terms, conditions, rate and duration. This protects the
consumer and the reputational risk of the lender and builder. The
builder has asked for an option to buy back a property in the event of
a potential repossession. This may be exercised where the default is
immediate and occurs on a house at the commencement of a
The scheme requires the use of panel lenders, solicitors and IFAs.
Belgravia will manage appointments to the panels. The scheme must
be controlled and transparent. The solicitors and IFAs will be trained in
the product and must agree not to profiteer from their panel
The scheme can be branded to meet an individual builder
requirement. Barratt have selected a brand of Easy Step. The product
will be supported by a brochure and information website. The website
offers details about every component in the scheme, as well as
supporting the home builder and home hunter with a range of free
house buying tools.
Easy Step for Barratt Purchasers
Only 10% deposit
Take 75% mortgage
Plus 15% top up loan
Providing an Easy Step
on to the property ladder
Struggling to secure a mortgage or save a large
deposit? Barratt Easy Step is here to help.
You only need 10% deposit
Barratt lends you 15% over 10 years
This means you only need a 75% mortgage
75% mortgages are easier to secure than a
conventional 90% loan from the same lender
Terms and conditions apply. Scheme cannot be used in conjunction with any other Barratt offer. Ask your sales adviser for full details. BDW Trading Limited (company number 03018173) whose registered office address is Barratt House, Cartwright Way, Forest Business Park, Bardon Hil l, Coalville, Leicestershire LE67 1UF (BDW) BDW is a subsidiary of Barratt Developments PLC. BDW provide a loan for 15% of the purchase price of the property which is secured as second charge on your property.
Easy Step for Barratt Purchasers
If you only have a small deposit of 10%
Barratt Easy Step is designed to help
Easy Step is a top up loan of 15% of the property
value repaid over 10 years with fixed monthly
How Does Easy Step Work?
Your lender will require you to have a 10% deposit. Your
mortgage will be for 75% of the property value. Barratt
Easy Step offers you a top up loan of 15%.
The Easy Step loan is for a fixed amount (15%) for 10
years with fixed repayments and a fixed interest rate. At
the end of 10 years you will have paid off your 15% loan
Purchase Price 100,000
Deposit required 10% 10,000
Mortgage 75% 75,000
Easy Step loan 15% 15,000
The Easy Step loan is repayable in equal
instalments of 166.66 including interest over a term of 10 years and interest is
APR 6.7% How Do I Apply?
Easy Step is available on houses priced
at 100,000 and above on selected
If you would like more details, your Barratt
Sales Adviser will refer you to an
Independent Financial Adviser who is familiar
with the scheme.
Your lender will use a conveyancer who is
familiar with this scheme. You will be invited
to use the same firm as this will offer you
attractive rates and a swift transaction.
Applications will be subject to status. Barratt
terms & conditions will apply, including
exchange of contracts within 28 days and
legal completion by a specified date. Written
details are available on request. Barratt
Homes does not give financial advice.
Mortgage lenders criteria may vary.
Barratt Easy Step Loans
Barratt Homes is not a financial institution and will,
therefore, look to such institutions to take over our loans
as soon as it can. This allows us to keep offering the
product and helping purchasers to secure an easy step
on to the property ladder. Assuming banks/lenders take
over our loans, nothing changes so far as the borrower is
concerned. The rate, the terms, the monthly
repayments, the direct debit/standing order always
remain the same.
Does This Mean I Have Two Loans?
Yes. Firstly, you will have a mortgage for 75% of the
property value. This may be fixed or discount your
Independent Mortgage Adviser will help you choose.
Secondly, you will have a fixed rate top up loan of 15% of
the property value. Add the two payments together to
compare the cost to a conventional 90% loan.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
OR ANY OTHER LOAN SECURED ON IT
Do I Qualify?
You must have a