Beverley Building Society has added a 100% loan-to-value (LTV), first-time buyer mortgage option to its family assist range.
The new product will allow family members to temporarily allow a charge to be placed on their own homes as security in lieu of a deposit.
The property assist mortgage is available at a three-year variable rate of 2.75%, a discount of 2.49% off the standard variable rate.
The new product has a fee of £800 plus the cost of an independent valuation of the property being purchased and, in some cases, the parental property offered as collateral.
When taken out, 20% of the purchase price is charged against the parental home, which is subject to a maximum loan-to-value ratio of 50%, inclusive of any existing mortgage.
The security remains in place for eight years, and will be removed subject to an independent valuation confirming the purchased property value has risen enough to at least replace the deposit or the security can be released earlier if the deposit amount is repaid by the borrower in full.
Beverley Building Society expects the deal to appeal to parents or grandparents who are asset-rich and want to help their offspring onto the housing ladder but cannot afford to gift them a cash deposit or simply prefer to hold onto their savings.
The product was added following the recent Nationwide House Price Index figures which showed a 14.3% rise to the end of March, the society explains.
Beverley Building Society head of new business lending Simon Glass says: “The situation with rising house prices is making it perhaps more challenging than ever for first-time buyers to get a footing on the housing ladder and, as a result, we’ve seen increasing interest in our family-assist mortgages generally.”
“However, there was an obvious gap to try to cater for those families who are keen to help but aren’t savings-rich, though they have built up significant equity in their own homes over the years.”
“We saw a golden opportunity to help them use that to support their loved ones in achieving homeownership, without actually having to part with any of their own hard-earned savings.”
