Homebuyers are being offered huge home loans in exchange for a slice of the profits when they sell their home, under a deal launched this week. Advantage, the new mortgage lending arm of Morgan Stanley, will allow house hunters to borrow up to seven times their income. Other mortgage companies rarely lend more than 4.5 times income.

Advantage claims that its deals could be the answer to the prayers of anyone struggling to clamber on to, or climb up, the property ladder.

But some experts are warning buyers that those who fall for the hype may find themselves worse off.

The deal offers buyers a high-rate mortgage for up to 80 per cent of the purchase price, depending on how much they can afford, plus a lower-rate “residential ownership loan” for between 15 and 35 per cent. Only the self-employed with annual earnings of more than £40,000 and no other credit could expect up to seven times income; for most people, six times is more likely.

Borrowers who choose the two-year stepped-rate deal will start paying 5.69 per cent interest on the mortgage element, already more than one percentage point higher than current mortgage best-buy deals. But this will gradually rise to a sky-high tracker rate pegged at 2.5 percentage points above the UK Libor (London Interbank Offered Rate, the bench-mark rate), giving it a current rate of 7.27 per cent.

Borrowers would be forced to pay this rate for a year, even after the two-year deal is officially over, because of punitive early repayment charges. On a £100,000 loan, interest-only repayments would shoot up from £474 a month in the first year, to £604 in the third. The residential loan is charged at 2.99 per cent interest. The bank will take a share of any gains in the property’s value equal to the residential loan the borrower chooses, but will also share the same proportion of any losses with the owner.

Melanie Bien, of Savills Private Finance, the mortgage broker, says: “The rates are high. The interest rate on the residential ownership element is cheaper, but though the borrower will save cash monthly by opting for a higher residential loan, they would sacrifice more at the end of the term.”

A borrower who opts for the full 35 per cent residential loan on a £200,000 mortgage would sacrifice £35,000 of their profits if the property rose in value by £100,000 before they sold. However, taking the full loan would minimise monthly repayments. The effective interest rate on a three-year stepped deal would be 5.4 per cent.

It also means that a homeowner unfortunate enough to sell his or her house at a £100,000 loss would be left just £65,000 out of pocket.

Ray Boulger, of John Charcol, the mortgage broker, says: “This is the only scheme that will also accept a share of losses, making it attractive.”

But others think that it could defeat its own aim by pushing house prices higher and making homeownership an unprofitable investment.

Simon Kent, head of retail banking at Troika, a financial services consultancy, says: “It could exacerbate the first-time buyer problem. It will support that end of the market in an artificial manner, because Advantage will make a play on affordability, but then make up the difference by adding in the profit-sharing loan.”

Buyers who cannot scrape together a 5 per cent deposit will be barred, as will high net worth individuals with their eye on million-pound pads — the maximum loan is £400,000. Anyone wanting to buy a new-build property will also have to look elsewhere.

Other mortgage lenders are expected to launch similar deals, but experts advise caution. James Cotton, of London & Country, says: “This deal is for borrowers who have exhausted all other avenues.”