100% mortgages available again

Last post: Mar 2, 2013

Good news for first-time home buyers, 100% mortgage is now available from Bath Building Society.

Good news for first-time home buyers, 100% mortgage is now available from Bath Building Society.  So, no down payment is needed?  Correct.  How about collateral and what can I use for it?  Well, your parent's house will definitely do. You heard it right.  In order to qualify under this scheme, the parent's property should be able to cover at least 25% of their child's home purchase price.  The buyer is then given a 5.29% fixed-rate deal for three years. The society used to offer a similar plan called a "Parental Assisted Mortgage", this required a 5% deposit on top of the charge put on the parent's home.  The society is also be extra careful now in granting these type of loans in order to prevent a repeat of the indiscriminate 100% lending trend that happened before the credit crunch. One of the major hindrances often faced by first-time home buyers is trying to save for the deposit.  The monthly repayments are not much of a problem since these are easily affordable and are even sometimes lower than the rent paid for similar pieces of property.  So this no down payment scheme will definitely be a great help and attract a lot of young buyers. Though there is no cost for the parent in putting a charge on one's home for their child, this may hinder their ability to borrow for themselves.  Another concern is the possibility of their home being repossessed if their child should default on payments.  That is why it is advised to seek financial consultation beforehand. One of the other considerations in this kind of scheme are the parents who are willing to help their kids purchase their first property, but are not able or liquid enough to pay the deposit at the moment. Rates are not that far from the 5.48% deal offered by the Aldermore, which is also fixed for either two or three years.  On the other hand, National Counties does offer a lower 4.59% rate, but a deposit of 5% is required. With the increasing demand for these type of mortgages, Barclay's has come up with a "Family Springboard" mortgage, while Lloyds TBS has its own version with "Lend a Hand".  Both mortgages allow parents to offset savings in lieu of their child's mortgage, instead of offering equity in their homes.  Though the rates for both are more competitive, they do require a 5% deposit from the buyer.  On top of that, parents are required to put up a cash deposit of 10% of the property's price for Barclay's, while 20% for Lloyds.  This cash deposit however, will be recovered by the parents after the mortgage is settled with the corresponding interest earned under a savings account. To be put in touch with a Mortgage advisor to discuss this or any other mortgage you are looking for please either call us on 0845 1260350 or complete our Mortgage enquiry form here and we will call you