Real Start FAQs  

Real Start

WHAT IS REAL START?
It is a scheme that helps buyers get on the property ladder with the help of a loan provided by REAL. It is NOT a shared ownership scheme.

WHAT WILL I OWN?
You will own 100% of the property at all times.

HOW DOES THE SCHEME WORK
Your purchase will be funded by two loans, the first provided by a mortgage lender and the second by REAL. The percentage of the property that REAL helps you buy will depend upon your financial circumstances which will be assessed by our nominated mortgage broker.

Your mortgage lender will protect its loan by taking a first charge (mortgage) over the property and REAL will protect its loan by taking a second charge (mortgage). 
 
Interest is not payable on REAL’s loan. 
 
WHO IS ELIGIBLE TO BUY?
It is available to any buyer who can obtain the relevant mortgage.  The Mortgage Broker will be able to advise you.
 
WILL I NEED A DEPOSIT?
Most lenders will expect you to pay a deposit of at least 3% of your equity share of the purchase price by providing a maximum 97% loan. Some lenders will however offer 100% loans, subject to status. Any deposit is payable when contracts are exchanged.
 
WHAT ARE THE MONTHLY COSTS OF REAL START?
Every month, owners will need to make payments including:

  • mortgage repayments to lenders (but not to REAL)
    service charges, if you buy a house or flat with shared areas that require maintenance;
  • council tax;
  • life insurance and payments into investment products if the mortgage is interest only;
  • buildings insurance; and
  • utility bills and other costs of occupying the property.

WHO WILL REPAIR AND MAINTAIN THE PROPERTY?
As with home ownership generally, you will responsible for repairing and maintaining the property.  
 
CAN I REDUCE REAL’S LOAN IN THE PROPERTY?
You can repay REAL’s loan in full at any time. The amount to be repaid to REAL is calculated as 15% (or lesser percent which you borrowed from REAL) of the open market value at the time.
 
WHEN IS REAL’S LOAN REPAYABLE?
You will have to repay REAL’s loan if you sell the property or you wish to re-mortgage for a greater amount than your initial first loan or after 10 years, although we may extend this to 15 years in cases of financial hardship.
 
WHO DOES THE VALUATION ON REPAYMENT?
If you are selling your property, REAL would look to agree an open market value with you, perhaps based on the contract sale price, provided the property has been adequately marketed, there is no connection between the seller & the buyer and any split between the purchase price & carpets, curtains etc is reasonable. If we cannot agree the open market value then we will use qualified Royal Institute of Chartered Surveyors to determine the price.
 
WHAT IF I WANT TO SELL THE PROPERTY?
The property can be re-sold on the open market at any time. The amount repayable to REAL on its second charge is based on current open market value of the property at the time.
 
WHAT HAPPENS IF THE VALUE OF MY PROPERTY FALLS - HOW MUCH DO I HAVE TO PAY BACK?
If you borrowed 15% from REAL, you would have to repay 15% of the open market value at the time (even if this is less than the amount you borrowed from REAL).
 
WHAT HAPPENS IF THERE IS A MARITAL OR PARTNER SPLIT BETWEEN ORIGINAL PURCHASE AND FURTHER SALE OF THE PROPERTY - WHO IS RESPONSIBLE FOR EQUITY PAYBACK?
If there is a sale the REAL loan will have to be repaid; if there is a re-mortgage for more than the original loan the REAL loan will have to be repaid; if one partner leaves and the first lender is prepared to allow the other partner to take over full responsibility for the first loan then REAL will agree to a similar course with its loan. Similarly if partners break up and the new partner becomes a joint owner with the remaining partner and accepts responsibility for the existing loans.
 
CAN I REMORTGAGE?
Yes, if the amount you are borrowing remains unchanged or you increase the amount borrowed to repay REAL’s loan. If you wish to re-mortgage to raise money for other reasons e.g. to raise capital or for home improvements then you must repay the REAL second charge unless the lender is prepared to take a legal charge which will be repaid after REAL’s loan and not in priority to REAL’s loan.   
 
CAN I SUBLET?
Yes under the REAL scheme, but you need to note that it is probable that you will not be allowed to sublet under your first mortgage unless you agree to pay a higher rate of interest.
 
IS THERE A TIME LIMIT IN WHICH THE MONEY NEEDS TO BE PAID BACK?
Yes, after 10 years but there is a hardship clause which could allow you to delay repayment, up to a maximum of 15 years. The loan will also have to be repaid if the property is sold or if there is a re-mortgage which increases the amount of the first loan.
 
WHAT ABOUT IMPROVEMENTS MADE TO THE PROPERTY?
Any increase in value of the property due to improvements made to the property after REAL has sold it to you will be deducted in fixing the open market value. This will cover e.g. conservatories or extensions but not e.g. carpets, decorations etc.
 
Any loan arrangements are to be made through REAL’s nominated mortgage broker and using a REAL nominated solicitor.