Barclays is making improvements to its Family Springboard mortgage, a product designed to help first-time buyers get on the property ladder by letting a family member provide financial backing for the loan.
From today (6 May) first-time buyers obtaining the Family Springboard mortgage, which is fee-free, will see a stepped reduction in the interest rate they pay over a three year period, with a lifetime follow on rate of 2.49 per cent plus the Barclays Bank Base Rate (BBBR), which usually follows the Bank of England base rate and currently stands at 0.5 per cent.
Barclays Family Springboard stepped fixed-rate mortgage is specifically designed to help customers to adjust to their new financial responsibilities as a homeowner with a reducing mortgage payment during the first three years of owning the property. This offers customers a £636 saving over the initial three year term, according to Barclays estimates.
The Family Springboard mortgage allows ‘Helpers’ to use their savings to help homebuyers secure a mortgage by holding 10 per cent of the purchase price in a Helpful Start account. This enables the homebuyers to apply for a 95 per cent LTV mortgage. After three years the money is released back to the ‘Helpers’ with BOE + 1.5 per cent interest, providing that the mortgage repayments have been kept up to date.
| Product | LTV (%) | 1st Year Rate | 2nd Year Rate | 3rd Year Rate | Follow on Rate(BBBR+) | Application Fee | Min Loan | Max Loan |
| Family Springboard | ||||||||
| 3 year fixed | 95 | 2.99% | 2.79% | 2.59% | 2.49% | £0 | £5,000 | £500,000 |
“The appeal to family members is that they know their savings are helping their children without giving them up entirely. Having the rate “step down” over the initial three year term also gives further comfort that the mortgage will remain affordable and the savings returned, with interest, after three years,” Andrew Montlake, director at Coreco Mortgage Brokers, commented.
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Barclays Family Springboard explained:
