Mutual extends Family Mortgage range to support first-time buyers and movers with no-deposit option
Family Building Society has expanded its Family Mortgage range with a new product offering lending at up to 100% loan-to-value (LTV), aimed at first-time buyers and home movers who can draw on family support.
The five-year fixed rate mortgage is available for purchase only and allows borrowers to proceed without an upfront deposit, provided that family members supply additional security equal to 20% of the property value. This security can be made up of savings, a charge over property, or a combination of both.
The product is priced at an initial fixed rate of 5.19% over five years. It carries no application or product fees and offers borrowing of up to 5.33 times loan-to-income (LTI). The minimum LTV is 80%, with loans available from £96,000 up to a maximum of £750,000. Terms of up to 40 years are available, subject to affordability and criteria.
Family support can be structured in two ways. Relatives may place funds into a dedicated Family Security savings account, which pays 3.05% AER variable interest, or permit the lender to take a collateral charge over their own residential property for the amount needed to reach the 20% security level. The combined value of any security and customer deposit must total at least 20% of the purchase price. The security is held until the end of the fixed-rate period, after which it may be released, subject to conditions.
Support can come from parents, grandparents or other family members, without the need for a traditional gifted deposit. Instead, families can leverage equity in their existing homes or surplus savings to help buyers meet deposit-equivalent requirements and affordability tests.
“We were one of the first lenders to involve family members in the process of helping their children onto the property ladder some 12 years ago,” said Darren Deacon (pictured right), head of intermediary sales at Family Building Society. “Today’s launch of our enhanced Family Mortgage is a natural evolution in its development and reflects the help that is even more necessary today for first time buyers and next steppers.
“Having built up significant equity in their own property over the years, we know family members are keen to help their children and grandchildren on the property-owning journey, by using a small part of this equity as security. Equally, we know that gifting a deposit isn’t always possible or practical, but families may have savings that can be put to good use.
“Our new Family Mortgage offers a route to home ownership that offers hope to those struggling to get on the property ladder and for growing families looking for their next move.”
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