Are 100% mortgages on the way back?

Barclays has revamped its ‘family springboard’ mortgage, removing the need for those buying their first home or home-movers to put down anything in advance.

But they will still need plenty of help from the bank of Mum and Dad. A ‘helper’ has to put cash equating to 10 per cent of the house purchase price into a Barclays savings account and keep it there for three years. They will then get their money back, plus any interest accrued, providing their child has kept up with the mortgage repayments in the meantime.

The lender has also increased the maximum amount homebuyers can borrow as a multiple of their income.

Those earning more than £50,000 a year will be able to borrow up to 5.5 times their annual income, up from 4.4 per cent at present. And a buyer with no deposit could get a three-year fixed rate mortgage at just 2.99 per cent. Subject to underwriting.

Parents putting cash into a savings account will be paid interest of 2 per cent – or 1.5 percentage points over the Bank of England base rate, which is currently 0.5 per cent.

Parents, grandparents and other relatives help finance one in four mortgages. This year alone, parents are predicted to lend their children £5billion.

Some 300,000 homebuyers will end up using cash from loved ones to get a mortgage, purchasing homes worth £77billion in total, the research from insurance giant Legal & General and consultants Cebr predicts.

The average contribution will be £17,500. Over three-quarters of ‘Bank of Mum and Dad’ purchases – or 256,400 properties – will be completed thanks to assistance from the buyer’s parents.

A further 22,500 will be helped by grandparents, with 27,000 mortgages part-funded by other family members or friends. If all the lending power was combined it equate to the country’s tenth biggest mortgage provider.

If you would like to discuss this, or any anything else, contact our advisers today on 01202 937444 or visit our other websites to speak to a mortgage broker in Reading or a mortgage broker in Bournemouth