On 15th July, a new kind of mortgage was launched by the Family Building Society. The ‘Family Mortgage’ was created to allow relatives, such as parents and grandparents, to use their savings to secure a loan for a family member.
The new mortgage product could be ideal for first-time buyers who have relatives with large amounts of savings in their bank accounts. It could provide a lifeline for those young people who have been struggling to find a way to buy in the face of rising property prices.
Previously, relatives who wanted to help may have been concerned about losing their savings, but the Family Mortgage does not require relatives to give their money away. Instead, the home buyer secures the mortgage with a deposit of five percent while a further 20 percent of the loan is held in a savings account administered by the Family Building Society. The money must remain in the account for 10 years or more. A better interest rate can be obtained for the home buyer if relatives decide to give up the interest on their savings.
The new product may not be suitable for everyone, and those who can save up a deposit greater than five percent may well be able to find a better mortgage deal. It can be confusing trying to work out what your best mortgage option might be, and it is not surprising that many people are choosing to undertake CeMAP training in Manchester, Leeds, London and other cities throughout the UK, boosting the number of qualified mortgage advisers available to help.
