THE team behind peer-to-peer lender Unbolted has launched a new platform to help fund an alternative to shared ownership mortgages.
Unbolted is still running separately, but OnStep has been launched under the same regulatory permissions by co-founders Rito Haldar and Ashwin Parameswaran.
The OnStep platform lets applicants – with a minimum joint annual income of £40,000 – apply for an agreement in principle and they then have to find and agree a price on a property worth between £250,000 and £750,000, based in London or the surrounding prime commuter towns.
OnStep conducts income and affordability assessment on applicants and will then set up a property company to purchase the home and rent it out for five years.
The property purchase is funded by a 65 per cent loan-to-value mortgage funded by P2P investors – who earn an annual rate of 3.5 per cent over five years – and an equity loan with three or five per cent coming from the tenant and the rest from P2P lenders.
The investment can be held in an Innovative Finance ISA.
The tenant then pays a discounted rent – with 75 per cent of the rental income going to the P2P equity loan investors – and both share 20 per cent of the increase or decrease in the value of the property.
Tenants can increase their stake in the property over the five years and have the option to sell their share and move or keep it if they leave but there may be a penalty to pay.
After the five-year period, the tenancy agreement can be extended, tenants can buy the property and use their equity share towards the deposit, or they can sell their stake.