Help your children get on to the property ladder with new family mortgages

Help your children buy their first home with new bank schemes that let you keep your share of the mortgage in a separate account that earns interest
For first-time buyers it’s worth looking at Barclays’ new “family springboard” deal where the parents of buyers can use their savings to help their children.

It is just one of a host of new schemes aimed at helping more than 1.5 million would-be first-time buyers struggling to get onto the property ladder. According to a survey by First Direct, the biggest financial regret of 2012 for would-be buyers was that they failed to secure a property.

Despite there being a one per cent increase in property sales last year, only 640,000 homes were sold - half the number of homes that changed hands when the market was at its peak in 2006. But the good news for those looking to buy this year, is a host of initiatives should make it both possible for first-time buyers and cheaper for those with more equity.

For first and second-homers, it’s worth looking into the new Barclay's deal. Unlike other “guarantor” mortgages, parents don’t have to give away their savings for their children’s home purchase but see their cash stored in a separate, linked, deposit account – and get the money back after three years. Parents also receive interest on their 10 per cent of the property, paid at bank rate plus 1.5 per cent. Currently that would pay out two per cent — more than some savings accounts.

Meanwhile, their home-buying children need to put down only a five per cent deposit, giving the equivalent of a 95 per cent loan-to-value mortgage, at an interest rate of 4.69 per cent. After three years, it reverts to a lifetime tracker at 3.99 per cent above base rate.

Elsewhere, Yorkshire Building Society is offering a 90 per cent mortgage at 4.49 per cent, fixed for three years, and other 95 per cent deals are available under the Government’s NewBuy scheme, where the state and housebuilders together guarantee mortgages when buyers put up a five per cent deposit.

For buyers with greater equity stakes, five and two-year fixed-rate mortgages have fallen to record levels thanks to a price war amongst lenders. Chelsea Building Society has a two-year fix at 1.89 per cent for buyers with deposits of 40 per cent or more.

Yorkshire Building Society has made its two-year fix cheaper, cutting the rate from 1.99 per cent to 1.94 per cent. First Direct is offering a five-year fix at 2.69 per cent - the lowest-ever headline rate for a five-year deal, while the Post Office’s five-year deal is 2.74 per cent.

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