Buckinghamshire Building Society has launched a family assist mortgage available to first-time buyers who are finding it difficult to raise a deposit.
They can borrow up to 100% of the purchase price, with parents or grandparents providing the additional security using the equity in their property.
Parents or grandparents must have minimum remaining equity of £130,000 and the maximum loan-to-value is based on the number of bedrooms in their house.
Ray Boulger, senior technical manager at John Charcol, reckoned it’s a better value product than a similar offering from the Post Office but worse than Barclays’ Springboard mortgage.
He said: “It’s an interesting product. It’s better value than the Post Office mortgage that tries to do a similar thing. Certainly it’s good to see another lender coming into that sphere.
“We’re seeing more lenders coming into the market where family members can help other family members. We normally think parents or grandparents are the ones helping first-time buyers but it can work the other way around.
“But the best value for the market if you want 100% is Barclays’ Springboard.
“Buckinghamshire will take a first charge or a second charge. It’s a really useful scheme for situations where a family member has lots of equity in property and doesn’t have the help of money from family members. If that help is going to come by cash, Barclay’s Springboard is really good value.”
Boulger added: “It’s a case of the broker understanding which lenders offer which options. Unlike the mainstream residential market where rate will be a key parameter there are a relatively small number of lenders offering this type of mortgage so it’ll be more about which lender’s criteria fits.
“Bath also does some family assisted mortgages. Besides Barclays the lenders in most cases will be ones the client hasn’t heard of and therefore wouldn’t use without a broker advising them.”
Tim Vigeon, head of lending at Buckinghamshire, said it has always been keen to support the Bank of Mum & Dad to help their children onto the property ladder.
He added: “We already accept family gifts and family loans backed with a second charge to help first time buyers raise the necessary deposit on their home.
“The family assist mortgages offer a new option and demonstrate our commitment to look at innovative new ways to help first time buyers achieve their home ownership dream.”
Keith Barber, director of business development at Family Building Society, welcomed more competition.
He said: “We do up to 95% loan with 20% security from additional family members. The extra 5% can be gifted from family members as well.
“It’s good to see another addition to the market but I think ours has more flexibility to suit more family options and structures and multiple members can join in, for example some using equity and some using cash. We have many options available through our product.”