Buy-to-let
Barclays has removed the requirement for buyers to put down a 5% deposit with new changes to its Family Springboard mortgage.
Those looking to buy a home for the first time no longer need to provide a deposit themselves, only the 10% contribution from a parent is needed.
This effectively replaces the deposit requirement from the borrower. Previously, a 5% deposit was required from the first-time buyer to secure a Family Springboard mortgage.
The maximum rates have also been raised. Those with an income of more than £50,000 will be able to borrow up to 5.5 times their annual income, up from a multiple of 4.4.
The three year fix with no deposit is available at an interest rate of 2.99%, while the one with a 5% deposit is available at 2.79%.
Matt Sanders, head of money at Gocompare.com, said the mortgage won’t help the majority buy their first home.
He said: “For those with parents or benefactors able to part with this amount of money for three years, Barclays’ new mortgage could well be worth considering, however it’s hardly a no-brainer like the government’s recently launched Help-to-Buy Isa. It’s also worth remembering that the risk is spread across the buyer and the guarantor, so if the mortgage payments aren’t met, the guarantor may lose the money held in the savings account.
“Really, Barclays’ new product is largely suited for families with moderate to large savings and who don’t want or can’t wait for the benefit of a Help-to-Buy Isa. However, considering the risk associated with 100% mortgages, and with the mortgage market being particularly competitive at the moment, be sure to weigh up all your options and get fee-free advice before taking the plunge.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “The Family Springboard is an innovative scheme, and with this update it will allow even more prospective homeowners to get onto the ladder. For family members too, this revision has benefits – allowing them to get credit interest on the amount they deposit, whilst protecting them from exposure to the increased stamp duty levies on a second property.
“Our latest research into the Bank of Mum and Dad shows that family and friends will lend over £5 billion to loved ones in 2016 to help them purchase properties worth £77 billion across the UK. Unfortunately, in recent years, many first-time buyers have found themselves priced out of the market, struggling to save adequate deposits in a low interest rate environment, where house price inflation is vastly outstripping the pace of wage growth.
“The UK is suffering from a severe housing crisis, which is ultimately impacting affordability. The vast gulf between supply and demand must be bridged if the market is to return to health. Solutions need to be implemented that will produce concrete results and have a noticeable impact for buyers at all levels of the market.”
