A lack of awareness among consumers of mortgage deals that can help them use their relatives’ equity when buying a house could be dampening the market, according to mortgage professionals.
With first-time buyers facing increasing difficulty saving up for a new property, several products have been launched to help them use other sources of income when taking out a mortgage.
In March, Nationwide became the latest lender to offer a product to help young people get on the housing ladder by enabling relatives to raise funds from their property, joining existing schemes by the Family Building Society and Barclays.
But with much of the media focus on general schemes for first-time buyers, there are concerns that the message is not getting across to those most in need of the products that there are ways to get on the property ladder without a massive deposit.
Melinda Bush, adviser at Quartz Financial Services in Dartford, said: “I think it is because they are not mainstream. [The government's first time buyer assistance schemes] Help to Buy gets all the limelight.”
A recent survey by consumer group Which? showed that more than 30 per cent of first-time buyers needed financial help from their families in order to get onto the property ladder.
David Blake, from the Which? mortgage team, said lenders don't actively promote these non-traditional alternatives, but given the difficulties faced by first-time buyers in obtaining a traditional mortgage, he expects this type of creativity with mortgage design to become more common and more visible
He told FTAdviser: “Mortgage lenders are increasingly developing and offering non-traditional mortgage solutions to help first time buyers get onto the property ladder.
“New arrangements include 100 per cent mortgages, family deposit mortgages and joint-borrower/sole-proprietor arrangements.
“Regardless of your circumstances, it is important to seek professional advice from an independent mortgage adviser who will be able to help buyers and their families find the right solution for their situation.”
Keith Barber, associate director, business development at the Family Building Society, which offers a Family Deposit Mortgage, highlighted a number of obstacles when getting the message across to consumers.
“One problem is first-time buyers not knowing products exist and lack of knowledge of the full range of products among mortgage intermediaries, so there is an education job to do,” he explained.
“Another is that some of the consumer media, when talking about first-time buyer prices, are quoting average figures for the whole UK, which tend to be higher, and a focus on the numbers is putting people off.
“When people perceive something is not attainable, they find a set of thoughts around why they should not aspire to it
“We do use social media and had a campaign on Facebook for some time around first-time buyers and got into the consumer media, but we are subject to the agenda of the media themselves. What we don’t have is the big budget of TV advertisers.”
simon.allin@ft.com
