You may have seen the Barclays advert all over the TV and newspapers recently promoting the new Family Springboard mortgage*, which allows mum and dad (or another relative) to use their savings to help jump start their offspring onto the property ladder.
So how does it work, and is it worth giving in to the demands of the difficult daughter, that grows up wanting a doll, then a bike, horse and car and then finally a house as seen in the advert?
Basically the scheme allows first time buyers to get a reasonably competitive 3 year fixed rate mortgage with just a 5% deposit – providing mum and dad will use some of their hard earned cash as a security.
The buyer takes on the mortgage and the responsibility for the monthly payments while the relative opens a Barclays Helpful Start savings account which is linked to loan. The “helper” has to deposit 10% of the property purchase price into the account, which currently pays 2% interest.
Within the scheme Mum and Dad are not treated as a Guarantor and are not responsible for ensuring the mortgage is paid, nor do they have any rights over the property. The only stipulation is that the funds deposited in the “helper” account cannot be touched for the 3 years. Helpers also need to be aware that they funds can be accessed if the property was repossessed and there is a shortfall between the sale price and the mortgage amount. The small print also states they “may” retain funds in the event of missed payments on the mortgage account.
The scheme is not unique as we have seem similar products such as the Lloyds “Lend a Hand” deal and Market Harborough Building Society “Family deposit” mortgage, but both commit more savings and for a longer period so the Barclay offering edges slightly ahead of the competition. The Family Springboard mortgage is also not restricted to First Time Buyers and can also be used for those looking to move up the property ladder.
If you would like more information on the Springboard Mortgage give us a call on 0800 612 8099 or email us at info@choicefinancialsolutions.com
*Terms and Conditions apply/Early Repayment Charges apply/Fee can apply based on circumstances