The Affordable Local Homes mortgage is aimed at buyers of affordable properties through the Discounted Market Sale scheme.
The scheme, also known as Council Shared Equity or a reduced market value scheme, is where housing providers offer a discount on the purchase of new-build properties of up to 20%, making them more affordable than those sold on the open market.
It is available to people who do not own their own home and whose income does not exceed 45% of the discount market sale price of the property. The properties are also only available to local residents.
The fee-free products have a variable rate of 5.54% and are available up to 95% LTV, with an extended term of up to 35 years and unlimited overpayment options.
Daniel Capstick, Ecology Building Society’s senior mortgages product and proposition manager, said: “Most lenders are unwilling to offer home loans on properties with residence restrictions, so this lack of mortgage choice risks locking first-time buyers out of housing schemes created to help them.
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“That’s particularly true of schemes aimed at enabling purchasers to stay in their local area, where they have ties to family, friends and work.
“At Ecology, we believe being able to preserve these local links is an important part of building and maintaining sustainable communities, so we wanted to create a new product with a competitive rate to make it easier for more people to stay local as they step on to the housing ladder.”
He continued: “Our Affordable Local Homes mortgage is designed specifically to support buyers of Discounted Market Sale Homes, whether that’s through government schemes like First Homes, local authority projects subject to Section 106 agreements, or community-led schemes by groups such as Community Land Trusts.
“This section of the first-time buyer market is growing, but currently under-served by lenders, so we’re asking more mortgage providers to follow our lead and look at how they can support this customer group.”
Ecology Building Society brought out a discount rate mortgage for green renovations earlier this year and has also changed its stress test.
