Lloyds Bank launches into 100% LTV lending

Ryan Bembridge

January 28, 2019

Lloyds Bank has launched a 100% loan-to-value mortgage on a direct-to-consumer basis.

The product, marketed as a ‘Lend a Hand’ deal, is a 3-year fixed rate mortgage at 2.99%.

The mortgage requires family members to contribute at least 10% of the loan as security in a savings account, which earns an interest rate of 2.5% for three years.

To qualify at least one of the borrowers or savers must be a Club Lloyds customer.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The limited distribution channel will enable Lloyds Bank to quantify demand, but hopefully it will soon be rolled out across all channels.

“Those borrowers with little or no savings for a deposit will no doubt be struggling and may wonder if they will ever become a homeowner without support.

“Parents, too, may well want to help their children get their first home, but are hesitant to relinquish their hard-earned savings, so a guaranteed fixed return for three years at a fantastic rate will no doubt be enticing.”

As Springall highlighted, a similar deal on the market is Barclays’ Family Springboard mortgage, which is priced 0.01% higher than Lloyds Bank’s 100% LTV deal at 3.00% fixed for three years.

Parents can also put up a deposit of 10% in a savings account, earning 2.25% over three years.

That savings product differs by being a 1.50% above Bank Base Rate, so savers could earn more interest than the 2.50% if there is a base rate rise and less if there is a cut.

The Lloyds product has a maximum term of 30 years, compared to 25 with the Barclays product.

The mortgage has a maximum loan value of £500,000, and comes with £500 cashback.

There is also £300 cashback towards family member legal fees.

The mortgage is available in England and Wales.

Vim Maru, group director, retail at Lloyds Banking Group, said: “We are committed to lending £30bn to first-time buyers by 2020 as part of our pledge to help people and communities across Britain prosper – and Lend a Hand is one of the ways we will do this.

“At the heart of this market-leading product is helping to address the biggest challenge first-time buyers face getting on to the property ladder, while rewarding loyal customers in a low rate environment.

“Although times have changed, children still have a similar ambition to their parents – to own their own home. Lend a Hand helps parents to invest in their children’s future and get the best return on their cash.”

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