Barclays will now accept a 10% deposit from parents or family members wanting to offer children a helping hand onto the property ladder.
Barclays will now accept a 10% deposit from parents or family members wanting to offer children a helping hand onto the property ladder without the need for the primary borrower to put in a deposit.
The Family Springboard mortgage previously required a 10% deposit from parents plus an additional 5% deposit from the child purchasing their first home.
After three years the money in the savings account is returned to the family helper with interest.
The criteria change is part of a range of amendments to the deal including raising the maximum income multiple to five and a half times the borrower’s income where the borrower hasan income of more than £50,000.
A 3-year fixed interest rate is 2.99%.
Recent first time buyer research carried out by Barclays Mortgages highlighted the significant burden high deposits placed on first-time buyers and their parents.
It found that 35% of prospective first-time buyers are forced into asking their parents for help when securing a mortgage.
Of these, 20% who accept help see the money as a ‘gift’ that doesn’t need to be paid back, therefore placing a significant levy on the bank of Mum and Dad.
Raheel Ahmed, head of Barclays Mortgages said: “We want to offer more people a way to get on the property ladder and to walk through the door of their first home earlier than they perhaps thought.
“Buying a first home is a hugely important step in everyone’s life and one that has unfortunately become tougher for many in recent years.
“When Barclays originally launched the Family Springboard mortgage in 2013 we made the decision to help both homebuyers and the family who wanted to support their children, but couldn’t just give away large sums of money.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said:“The Family Springboard is an innovative scheme, and with this update it will allow even more prospective homeowners to get onto the ladder.
"For family members too, this revision has benefits – allowing them to get credit interest on the amount they deposit, whilst protecting them from exposure to the increased stamp duty levies on a second property."
Yesterday research from Legal & General revealed that theBank of Mum and Dad is now the equivalent of a top 10 mortgage lender in the UK and will be involved in a quarter of property transactions this year.
In 2016 the Bank of Mum and Dad will lend over £5bn, provide deposits for over 300,000 mortgages and help purchase £77bn worth of property.
