The Family Springboard Mortgage from Barclays Mortgages, designed for first-time buyers who have no deposit, has had a makeover.
Borrowers now take out the product on a five year fixed rate basis and a term of 35 years. This has increased from a three year fixed rate and a 25-year term.
Barclays says that due to the extended term, first-time buyers will now be able to borrow a larger sum.
The product is still available with no deposit required from the borrower but it needs to be supported by a helper contribution – 10% of the purchase. This money, usually from a relative or guardian, is then invested in a savings account and returned to the helper with interest at the end of the fixed rate period.
Hannah Bernard, head of Barclays Mortgages, said: “Since the launch of our Family Springboard Mortgage in 2013, we’ve been leading the way in offering more people the opportunity to step onto the property ladder earlier than they might have been able to previously.
“High deposits place a significant burden on first-time buyers and their parents, forcing many first-time buyers into asking their parents for help when securing a mortgage.”
Instead of gifting the deposit, the family helper opens a Helpful Start account linked to the mortgage into which they deposit savings equal to 10% of the final price of the house.
After five years the money in the account is returned to the family helper with interest. The interest rate on the Helpful Start account tracks a margin of 1.50% above the Bank of England Base Rate. This gives a current gross rate per year of 2.25% (i.e. 1.50% plus current Bank of England Base Rate of 0.75%).
Hi, if two separate helpers are helping with 10% deposit. Do they open two separate accounts linked to mortgage.
A spokesperson for Barclays said: ‘Whether you have one or more helpers with the 10% contribution, we would only open one Helpful Start Account’