Thu 05 May 2016
The ‘Family Springboard’ mortgage removes the need for buyers to put down any deposit provided that a ‘helper’ – often parents – can put in the 10% required which they will get back after 3 years.
Under the new deal, providing the borrowers have kept up all mortgage payments the 10% deposit provided by the ‘helper’, which is put into a savings account linked to the mortgage, will be returned with interest after 3 years.
Maximum borrowing amounts have also been altered with customers earning more than £50,000 now able to borrow 5.5 times their income, increasing from the previous 4.4 times.
The ‘helpful start’ savings account will receive an interest rate under the 'Family Springboard' deal of 2% (the Bank of England base rate plus 1.5%.)
The large sum of money required by first time buyers to get onto the property ladder is proving harder and harder to save, especially as house prices continue to increase in most areas. Barclays recent research has found that as much as 35% of first time buyers will ask the ‘bank of mum and dad’ for help and maybe the new ‘family springboard’ could see more parents now willing or able to help out.
Richard Lester, Independent Financial Advisor at APT comments on the recent announcement from Barclays “This is more evidence that lenders are relaxing their criteria to bring in more business.
These types of schemes have been around for a while where the parents’ money is locked away for a number of years in a deposit account, almost acting as an insurance policy in case repayments aren’t maintained.
The fact that no actual deposit is transferred at completion and mortgage funding is effectively 100% is a positive step, although I think we are a long away off seeing a conventional 0% deposit mortgage.”
For free independent mortgage advise contact APT Financial Management who will be more than happy to help.
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