Beverley Building Society has added another option to its family-assist range with a new 100% LTV, first-time buyer mortgage option where family members can temporarily allow a charge to be placed on their own homes as security in lieu of a deposit.
The 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 Beverley was prompted to add this new variant to its range of family-assist options by recent Nationwide House Price Index figures which showed a 14.3% rise to the end of March.
This followed February’s figures which placed the average house value in the UK at a record £260,230 – an increase of £29,000 in the average UK house price over the previous 12 months, the largest ever annual increase, in cash terms, since the launch of the Nationwide index in 1991.
And although annual growth slowed to 11.2% in May – though still representing a 0.9% month-on-month increase taking seasonal factors into account – the cumulative impact has been to make homeownership harder to achieve than ever, for the average first-time buyer.
Property Assist mortgage details at a glance:
- 3-year variable rate of 2.75% (a discount of 2.49% off SVR)
- Product 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
- 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
- The family member offering their home as security must seek independent legal advice.
The new product complements the Society’s existing Income Assist family-assist option, which include guarantor and joint borrower sole proprietor arrangements.
Simon Glass (pictured), head of new business lending, said: “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.”
