Shared equity mortgage could help in case of 2% interest rate rise

19-Jul-2010

Published by Helen Adams

Shared equity mortgages might resolve potential repayment problems in the face of a rise in interest rates.

Spareroom.co.uk recently reported an increase of two per cent in the base rate would mean rents no longer cover mortgage repayments on 43 per cent of rented properties.

First-time buyers might also be affected, as expensive house purchase loans could take individuals beyond their means if interest rate rises were to inflate the cost of borrowing.

A shared equity mortgage could resolve this issue, as any sharp or unexpected increase in repayments would be divided between two or more people, reducing the effect on individuals' wallets.

Chris Jenkins, co-owner of the Homeowners Advice Centre, said a hike in the base rate would "undoubtedly push some ordinary homeowners … over the edge".

This also applies to those in the market for their first property, as house-hunting can quickly give way to purchasing, meaning prospective buyers may wish to consider all their options before settling on a finance product.

At FirstRungNow we can demystify shared equity so you can get a shared equity mortgage!

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