Nationwide Building Society has launched a new mortgage that lets parents raise funds from their existing home to help their children get on the property ladder.
The building society said its Family Deposit Mortgage range is aimed at homeowners looking to support other relatives.
Parents can borrow extra money from their own mortgage to put towards a deposit for their child.
It is also available to help those moving to a new home as well as relatives looking to assist older parents.
Customers can borrow up to of 80% of the loan-to-value of the mortgage.
Both existing Nationwide mortgage members and those remortgaging to the society from another lender can apply for the Family Deposit Mortgage to raise extra capital for a family member.
The buyer receiving the funds must take out their own mortgage with Nationwide, selected from any product in the standard mortgage range.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “These latest Family Deposit remortgage deals from Nationwide will be great news to those hoping to help a family member step onto the property ladder, particularly as the product fee can be added to the advance.
“Nationwide will enable customers to borrow additional funds as a deposit to assist with a property purchase by another family member, which could really make a difference. This could be a remarkable option for families who have readily available equity to help their other family members.”
Getting on the property ladder has now become so difficult first-time buyers are increasingly having to rely on the Bank of Mum and Dad for financial help.
According to research by Legal & General, the Bank of Mum and Dad now lends over £5 billion a year, making it the equivalent of a top 10 mortgage lender in the UK.
There are fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
Tougher affordability checks from lenders and rising house prices have also made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
Low interest rates combined with the economic recovery have done little to reduce the need for rented housing, while house price inflation ahead of wage growth has pushed property prices out of reach for many.
“At a time when house prices continue to rise, borrowers pay out on eye-watering rent and their savings don’t reach very far – any kind of assistance to help struggling first-time buyers get onto the property ladder will be a bonus,” said Springall.
“The average first-time buyer deposit has almost hit £30,000 according to the Council of Mortgage Lenders, which will be devastating news to those trying so hard to raise enough cash.”
Family members are classified as being a spouse, civil partner, parent, brother, sister, child, grandparent, grandchild or someone whose relationship with the applicant has the characteristics of a family relationship such as a step-child or partners.
Henry Jordan, Nationwide’s head of mortgages, said: “Our Family Deposit Mortgage range has been launched in recognition of customer demand for a flexible and accessible way to use the wealth tied up in people’s homes. The aim is to help not only first-time buyers but also home movers to secure their own property.
“We know that trying to raise a deposit can be the most significant barrier to becoming a home owner. This Nationwide range will enable families to give mutual support to each other and provide new options for home ownership.”
The deals include:
- Two-year fixed rate, five-year fixed rate and two-year tracker rate mortgage deals with a £999 fee or no fee.
- Rates start at 1.15% for the two-year tracker and 1.20% for the two-year fixed rate, both with a £999 fee, a discount of 0.09% on the core product range.
For existing Nationwide mortgage members, those helping the buyer can borrow the additional amount as a Further Advance.
These are:
- Two-year fixed rate, five-year fixed rate or two-year tracker, all with no fee.
- The discount on the core rate for the Further Advance is 0.20% and rates start at 1.34% for the two-year tracker and 1.39% for the two-year fixed rate.
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Having been a Nationwide customer for 15 years I was recently obliged to part company with the lender due to its bafflingly inept inflexibility and arbitrary withdrawal of the ‘key features’ originally sold to me. But having looked at other providers found Barclays Family Springboard mortgages delivered far more flexibility than Nationwide. On reflection found Nationwide’s approach to lending to be Dickensian at best.
could you please send details as i do not have a mortgage