Barclays is to launch a new "family mortgage" deal that allows parents to use their savings to help their children get on the housing ladder.
Crucially, these savings won't simply be handed over to their offspring instead they will be kept in a separate, but linked, deposit account. Provided that parents stump up 10pc of the asking price of the property, their children will need to put down only a 5pc deposit to qualify for a mortgage .
In recent years the number of first-time buyers has fallen, thanks to tighter lending restrictions, meaning that many would-be home owners need a 20pc deposit to qualify for an affordable home loan. Recent research from the Council of Mortgage Lenders has shown that the average age of a first-time buyer has risen to 35, and the average deposit required is now almost £30,000.
This new Barclays "Springboard" mortgage will be available from next week (January 14).
First-time buyers will be offered a three-year fixed-rate mortgage at 4.69pc. After this period the loan will become a lifetime tracker at a rate of 3.99 percentage points above Bank Rate. Borrowers will also pay a £499 fee.
Parents have to lock their savings away in a linked Barclays account for these three years. The account will pay interest at Bank Rate plus 1.5 percentage points (giving a rate of 2pc at present). Provided the homeowners has kept up with the mortgage repayments parents are free to access this money at the end of the three-year term.
The new product from Barclays follows a similar move from Lloyds, which launched its "Lend a Hand" mortgage deal in 2009. However, this loan required parents to put savings equivalent to 20pc of the property's purchase price in a linked account.
Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: "It's been surprising that other lenders have not tried to emulate Lloyds' Lend a Hand scheme, so we welcome this move, particularly as it will be available via intermediaries as well as in bank branches."
He said the fact that parents could access this deal with a significantly smaller savings pot should give it a far wider appeal.
David Hollingworth of London & Country Mortgages said: "These schemes offer better far rates than would be available to those who have just a 5pc deposit and it allows the Bank of Mum & Dad to keep control of their savings. This is useful for parents who simply can't afford to gift a lump sum to their children. Many may need this capital to help fund their own retirement plans."
He added that the rate was certainly competitive when compared to similar deals. Melton Mowbray Building Society offers a 95pc mortgage for first-time buyers, without parents having to put down any security. However this charges a rate of 5.49pc and comes with a £998 fee.
Meanwhile, both National Counties and Aldermore building societies offer first-time buyer deals which are secured on the equity in the parent's property. With the National Counties "Family First" mortgage the homeowner is charged a rate of 4.89pc - for two years - and pays a £495 fee. The Aldermore "Family Guarantee" mortgage charges a rate of 5.98pc for three year, and comes with a more significant £1,298 fee.
However, if first-time buyers save a 15pc deposit - or are given this 10pc by their parents outright - they could secure a rate of 3.69pc from the Leeds Building Society, significantly cheaper than the 4.69pc charged on the Barclays Springboard mortgage.
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