Nationwide launches mortgage aimed at parents helping their children to buy a home
The deal is only available to existing Nationwide mortgage members and those re-mortgaging with the society from another lender
NATIONWIDE has launched a new mortgage deal that allows parents to raise funds from their property to help their children get on the property ladder.
Britain's biggest building society said the mortgage is aimed at home-owners looking to support other relatives.
Parents who sign up to the deal are allowed to borrow extra money from their own mortgage to give to a child or grandchild to buy a house.
The Family Deposit mortgage range also allows existing Nationwide mortgage members, or those re-mortgaging to the Society from another lender, to assist older parents to move.
The family member receiving the funds must take out their own mortgage with Nationwide, from its standard mortgage range.
Customers can borrow up to 80 per cent loan-to-value (LTV) to help their family member.
Nationwide said that family members who could be helped include a spouse, civil partner, parent, brother, sister, child, step-child, grandparent, grandchild or someone whose relationship with the applicant has "the characteristics of a family relationship".
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Henry Jordan, head of mortgages at Nationwide, said: "Our Family Deposit mortgage range has been launched in recognition of customer demand for a flexible and accessible way to use the wealth tied up in people's homes.
"The aim is to help not only first-time buyers but also home movers to secure their own property."
Experts have welcomed the deal, saying it provides a boost to struggling first-time buyers in the UK.
Rachel Springall, a spokeswoman for financial website Moneyfacts, said: "At a time when house prices continue to rise, borrowers pay out on eye-watering rent and their savings don't reach very far, any kind of assistance to help struggling first-time buyers get on to the property ladder will be a bonus."
She said first-time buyers looking to boost their deposit could also consider a Help to Buy ISA, which comes with a government bonus.
Other lenders offering deals that allow families to help relatives buy a property include Barclays, which offers a Family Springboard mortgage.
Barclays' deal allows people to take out a mortgage if a helper puts up 10 per cent of the house purchase price.
The helper receives their savings back after three years, with interest, as long as the mortgage repayments are kept up.
How to get help buying a house
THERE are several government schemes available to help you get onto the housing ladder.
- Help to Buy loan: This scheme is for those who have a 5 per cent deposit, and is only available on new-build properties that are worth less than £600,000. The government lends you up to 20 per cent of the property value (interest-free for the first five years) which gives you access to cheaper mortgages. You will need to pay this back at the end of the mortgage or when you sell.
- Starter Homes: First-time buyers under the age of 40 can access this new scheme. You’ll get a 20 per cent discount on the market value of the property (new-build only) but you cannot sell or let the property for five years after you buy it.
- Shared ownership: This scheme is available to non-homeowners who earn £80,000 a year or less (£90,000 in London). People can buy a share of a home from a housing association and continue to rent the remainder. Buyers will need a 10 per cent deposit as well as money to cover stamp duty and other fees. You’ll also need to find a mortgage lender that is willing to lend on shared ownership properties.
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