Hands up who's already started mentally staging their new home?
Getting a foothold on the property ladder is every first-time buyers dream. But with the average deposit size across the UK coming in at £33,211, it can take years before this dream has any chance of becoming a reality.
Until now. Could the new mortgage product from Lloyds Bank be set to change this picture?
The new offer gives first-time buyers the opportunity to own their own home, without laying down a huge deposit first.
Lloyds Lend a Hand mortgage
In place of a deposit, the 100 per cent LTV Lend a Hand mortgage requires a family member to contribute up to 10 per cent of the loan as security. And to sweeten the deal for the Bank of Mum and Dad’s investment, their savings will earn a three-year fixed rate of 2.5 per cent.
The three-year fixed rate mortgage at 2.99 per cent is available for a maximum value £500,000 and a maximum term of 30 years. At least one of the borrowers or savers must also be a Club Lloyds – one the bank’s current accounts – customer.
‘We are committed to lending £30billion to first-time buyers by 2020’ explains Vim Maru, Group Director at Lloyds Banking Group. ‘ This is part of our pledge to help people and communities across Britain prosper’.
‘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.’
Further findings behind buying a home
New research conducted by Lloyds Bank revealed that buying a home (43 per cent) is the number one life goal for people aged 18 to 35.
Further insights from the survey revealed 50 per cent claimed a lack of a deposit was the biggest barrier to obtaining their first home. Just under a quarter (24 per cent) revealed that not being able to afford to buy in their desired location proved the biggest stumbling block.
The Post Office also offers a deposit-free mortgage for first-time buyers called Family Link. The Post Office lends first-time buyers 90 per cent of the loan value to the buyer. While the remaining 10 per cent is also loaned as a deposit, but this is secured against the home of an assistor.
The assistor should be a close relative (parents and step-parents, brothers and sisters and step-brothers and step-sisters).
The assistor’s property must be mortgage free and both the buyer and the assistor are named on this mortgage. Again the maximum loan is £500,000.
Would you consider a 100 per cent mortgage?