Kensington Mortgages and Proportunity are to collaborate to help first time buyers to get on the housing ladder.

The specialist lender will partner with Proportunity to allow borrowers with just a small deposit to take advantage of Proportunity’s shared equity loan scheme.

This partnership will enable people with only a 5% deposit to buy the house they want or need. It is also available to people who want to move home but who only have a small deposit.

Proportunity will lend up to £150,000 or up to 25% of the property value. Kensington can then offer a first charge mortgage at a lower LTV, lowering the risk for Kensington while ensuring that more people can get the mortgage that they need. The combined loan will enable borrowers to borrow up to six time their salary. This enables them to buy a property up to 25% bigger than they would otherwise be able to afford.

This deal between Proportunity and Kensington enables borrowers to get a mainstream mortgage at a lower rate of interest than taking out a 95% LTV mortgage, lowering the overall cost of their mortgage across the two rates.

Proportunity loans work in a similar way to the government’s Help to Buy scheme, except they are also available on existing properties and to those who are already on the housing ladder as well as to first-time buyers. It will enable borrowers with small deposits to continue to take out mortgages with Kensington even after the Help to Buy scheme is discontinued in 2022, next year.

Paul Lewis (pictured), head of intermediary partnerships at Proportunity, said: “This partnership is good for Kensington, good for Proportunity and, more importantly, good for the borrower.  Kensington Mortgages are known as a leader in the specialist lending market, and their forward-looking approach makes them stand out still further as a lender who will reach out to credit-worthy borrowers with real and practical solutions.”

Craig McKinlay, new business director at Kensington Mortgages, added: “This innovative shared loan from Proportunity fills a much-needed gap which will increase in importance as the Help to Buy scheme tails away next year. There is a real need to help people who only have a small deposit and don’t have the luxury of a parent or grandparent to help them onto the housing ladder or to move home, this partnership with Proportunity means we can do that.

“The Proportunity shared equity loan will work well with our specialist range of mortgages helping borrowers both to scale up or to buy that first property. The fact that Proportunity also makes this available on existing properties and those already on the housing ladder, significantly increases the number of people that we can now help.”