A mortgage offer to appreciate

Mortgage interest-free for as long as you like? You can with SAM. Clifford German reports

The Bank of Scotland's Shared Appreciation Mortgage will offer borrowers an interest-free repayment mortgage for as long as they want it when it is launched in England and Wales only later this month. There is a pounds 500 fee, but there is no maximum term and no maximum age for the borrower, and existing homes can be remortgaged

You can only borrow up to a quarter of the value the bank puts on the property, however, which makes this unsuitable for poverty-stricken first- time buyers but ideal for middle-aged owners and pensioners in need of capital. And when you sell the house, or pay off the mortgage, the bank will want its money back in full, plus a percentage of any profit you make on the deal. If you only borrowed 10 per cent of the value, you would give up 30 per cent of the profit, on a 20 per cent loan the bank would want 60 per cent of the profit, up to the maximum of 75 per cent on a 25 per cent loan.

If you need to borrow more than 25 per cent of the property value, or if you don't want to give away quite so much of any potential profit, you can borrow up to 75 per cent of the valuation, but the mortgage will then cost you 5.75 per cent a year fixed for the whole life of the mortgage, and the proportion of the profit you give up on resale is the same as the amount you have borrowed. For example, if you borrowed 60 per cent of the value you give away 60 per cent of the profit

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