Barclays is launching a guarantor mortgage that allows family members to use their savings to help first-time buyers onto the housing ladder.
Tipped by Money Marketing in June, the family springboard mortgage will be available to borrowers with a 5% deposit. A family member must deposit 10% of the purchase price in a specific Barclays savings account.
From 14 January the product will be available to homebuyers through branches and intermediaries. It is fixed for three years at 4.69%, reverting to a lifetime tracker at base rate plus 3.99%, and there is a £499 fee.
The family member will get their savings back after three years, if all of the mortgage payments are met, and receives interest at an annual equivalent rate of base rate plus 1.50%. Missed payments will affect the interest rate available and put some of the capital at risk.
Barclays managing director of intermediaries David Finlay says: “We genuinely believe with this, along with some of the other stuff we have done, we will start to help first-time buyers back into the market.”
The product is part of the bank’s campaign to target first-time buyers that began in June with the launch of the family affordability plan, which allows parents and children to pool their income to secure a larger loan.
Emba Group sales and marketing director Mike Fitzgerald says: “This is a great way to earn money while helping out your kids. I can see a lot of parents wanting to take this up.”
The bank will also embark on an aggressive rate cutting programme on 10 January which it claims will see it offer some of its cheapest ever mortgages.
Rates will fall by up to 1.00%, with the lender cutting a 70% LTV three-year fixed rate from 3.89% to 2.89%.
It will cut up to 0.3 per cent off its range of two-year fixed rates, offering a 60% LTV product at 2.39%, with a £999 fee, and will cut up to 0.60% off its range of five-year fixed rates, with rates starting at 3.39% for a 70% LTV product.
Barclays will also launch a new NewBuy product, a four-year fixed rate at 4.89%, with a £499 fee.
For advice and assistance in arranging any of these products please contact Complete Mortgages on 01483 233014.