New website for ‘finance orphans’

Image copyright Reuters Image caption The programme may not be for everyone

We’ve all had it: big bills come in, you’ve made it all right and you suddenly find yourself broke.

Millions of people have seen their finances fall on hard times after being hit by the credit crunch.

Some households and businesses have felt the effect with companies filing for bankruptcy and others struggling financially.

For some, this proved tough enough to send them back into the job market – but it doesn’t help people who are new to the UK, whose lack of financial knowledge, poor planning or even experience of how to make small changes to their lives that make a difference.

These people have turned to other forms of finance or alternative avenues to help with their financial dilemma.

One idea is to join a credit club. This is where an organisation offers regular help with borrowing money. These clubs tend to focus on short-term interest-free loans from friends or family members to carry people through to more permanent, affordable finance.

Yet these club alternatives are not for everyone – among those who need to look to longer-term solutions are those who may be poor with low credit scores or who will never be able to qualify for a cheap loan on their own.

Instead, a new UK-based website has been launched that’s giving people a bridge to provide them with the financial independence they need for home ownership.

The initiative, called Owner-Resident, will allow people who are new to the UK but have bought a home to jump straight into a loan-to-value option (which means the difference between a person’s initial mortgage and their home’s value).

Ilene Robinson, 47, moved to the UK two years ago and is in the process of making her personal finance life work and she says owning her own home is a top priority.

“I got a mortgage to buy a house which is a big step for a new resident,” she explains.

“I have such a sense of permanence for it, I can’t imagine living anywhere else.

“This will actually be a lifeline if things don’t work out elsewhere.”

Image copyright User Mike O’Reilly Image caption Ilene says she may not have got a mortgage to buy a home if she didn’t have this website

Ms Robinson is trying to acquire a two-bedroom home in St Albans with home equity loans from owner-residents and property companies.

“I’m learning to make small changes which are better than throwing a big one away, so I’d be only too happy to save at least £100 per month if it doesn’t work out,” she adds.

Ms Robinson is one of thousands of people who have signed up to the project, which is launching a loan-to-value offering from trade house Ashley Homes.

By taking advantage of this scheme, buyers are put into a simpler mortgage that sets them up with a 2.5 per cent deposit from Ashley Homes. They will then be able to borrow the rest from lenders such as mainstream lenders.

Want to join the programme?

You simply need to let Ashley Homes know what changes you would like to make in your personal life to improve your financial situation.

If you want to participate in the home-ownership loan, Ashley Home will then contact you a few weeks after the information on how to take part.

You will then need to sign up to the home-ownership loan and confirm that you are prepared to pay 2.5 per cent as a normal loan interest rate.

Owner-resident may be something that suits you and your circumstances but it is not for everyone.

Doing so may impact your credit score which will be decided by mortgage companies after they have had time to analyse your information to see if you can successfully pay back the loan in the future.

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