It aims to help by using parents' (or another close family member's) income as a basis for borrowing a higher amount than they might ordinarily afford.
How it works:
• The maximum mortgage available is calculated on the guarantor's income less existing commitments.
• The guarantor must have good family ties with the applicant and be able to demonstrate the ability to cover their own financial commitments together with the applicant's total mortgage commitment
• The society's normal income criteria is applied to assess the mortgage but by using the guarantor's income as a basis for the maximum loan
• The guarantor can be released at any time providing the borrowers income covers the outstanding mortgage (based on normal lending criteria)
• The borrower can supplement income by taking in lodgers providing the lodger signs the society's occupier consent form.
With a 10% deposit, the product has a 5 year stepped fix rate of 3.99% until 09/05 and then 4.49 until 09/08; with a 5% deposit, the rates are 4.49% and then 5.49%. Borrowers are allowed to make 10% capital repayments each year, penalty free.
Tony Burdin, head of marketing & PR, Leeds & Holbeck Building Society, said: "With house prices so high, first-time buyers have to scrimp for longer to save bigger deposits to make their first purchase, by which time their ideal property may have become unaffordable. The 'First Steps' guarantor mortgage is the ideal solution, since it allows young professionals, with the help of parents or family, to buy a property long before they could afford to do so alone."
