Renters in deprived areas should be able to access 110% loan-to-value (LTV) mortgages to renovate their new homes, think tank Policy Exchange has recommended.
In its latest paper, Gerard Lyons, senior fellow at Policy Exchange, said more needs to be done “to turn Generation Rent into Generation Buy”.
It also recommends allowing those who have shown that they can keep up with monthly rent repayments to borrow up to 100% LTV.
While the 110% would be for renters in deprived areas “where the extra 10% can help renovate the property”.
The paper also recommends making it compulsory for people with a long history of on time rental payments to be able to use that to improve their credit score.
Despite the recommendations, lenders prefer less risky loans having been bitten before by high LTV lending.
Lyons however said there are other sources of funding that might provide high LTV mortgages.
“Pension funds would like low-risk and long-term [investments] and investment banks like higher-risk but short-term,” Lyons said.
“If funding is blended from each of these parties, then mortgages can be matched to the borrowers’ needs. There are enough lenders who will lend to UK buyers.”
The recommendations from the think tank come as the Government undertakes a review of the mortgage market aimed at opening up opportunities for first-time buyers.
Amongst other things, the Government has mooted the idea of 50-year intergenerational mortgages.
