100% mortgages are back for first time buyers
On Wednesday 4th May 2016 Barclays extended it’s Springboard Family Assistance mortgage to allow first time buyers to purchase without putting a cash deposit into the property.
Instead the deposit is ‘covered’ by family or friends leaving funds of 10% of the purchase price on deposit with Barclays for three years. The deposit, therefore, is not ‘locked’ into the property.
We explain why the Family Springboard Mortgage was launched, its advantages, and the borrowers that it will suit.
The springboard mortgage is designed to make it easier for certain types of first time home buyers to get on to the housing ladder. The first time home buyer market is one that needs a boost, especially when you consider that:
- Current lending to first time buyers is less than half what it was 5 years ago
- Over 80% of those who do not own their own home aspire to do so
- The average purchase price for a first time buyer is now £173,000
- FTB mortgages usually require at least a 10% deposit
- Saving 10% of £173,000 even at £500 per month takes 3 years
- Figures still suggest owning rather than renting saves you nearly £200,000 over 50 years
Suitable applicants for springboard
Springboard applicants should:
- Have a clean credit record
- Be able to prove income to cover their mortgage
- Have friends or family willing to assist with a savings pot of 10% of the purchase price
Advantages of the springboard scheme
- Income multiples up to 5.5 X income for higher earners
- Tax risks – unlike a standard gifted deposit, the savings offered by the family member cannot lead to an inheritance tax bill on the borrower in the event of the donors death
- Flexibility – your family savings are not locked into the property. For example – unlike a gifted deposit, after three years the funds would be available to assist a sibling.
- Relationships – if you buy with your partner, your family’s cash is not bound up in the property should the relationship falter
- Ease – in some cases your supporting family member need not even move their cash
If the idea of the springboard mortgage appeals to you and your family, and you meet the suitability requirements above, we can help you buy your first home.
For advice before you apply please Call us now on 020 8979 9684