Nationwide Building Society has unveiled a mortgage range for families seeking to unlock capital from their home to help relatives purchase a property.
The suite of loans, called Family Deposit Mortgage, is available for individuals who hold a mortgage with the building society as well as those remortgaging the lender.
The buyer receiving the funds must take out their own mortgage with Nationwide, selected from any product in the standard mortgage range.
New borrowers have access to two and five-year fixes and a two-year tracker – available either direct from Nationwide or through mortgage brokers.
Rates start at 1.15 per cent for the two-year tracker and 1.20 per cent for a two-year fix, both with a £999 fee – a discount of 0.09 of a percentage point on the core product range.
The product range is also available direct to existing customers, all with no fee. The discount on the core rate for further advances is 0.20 per cent and rates start at 1.34 per cent for the two-year tracker and 1.39 per cent for the two-year fix.
All of the additional sum raised must be provided as a fully gifted deposit, with those gifting the money able to access up to a total mortgage borrowing of 80 per cent loan-to-value.
The range is also open to those with no current mortgage on their homes and those in receipt of retirement income.
Provider view
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.
“We know that trying to raise a deposit can be the most significant barrier to becoming a home owner. This Nationwide range will enable families to give mutual support to each other and provide new options for home ownership.”
Adviser view
Dan Clayden, director of Devon-based Clayden Associates, said: “It does not surprise me that Nationwide has come up with this product range. As a result of the changes in affordability criteria following the credit crunch, a lot of parents have helped their children onto the property ladder by jointly buying with them. The increase in stamp duty on extra properties means that the option of helping their children buy a property has become less attractive.
“Being assessed as part of a mortgage, but not having an equitable interest and therefore not being named as joint owner of the property could be a good solution for parents and their children.”
Charges
Ranges from fee free to £999.
Verdict
Getting onto the property ladder has been a difficult feat for many aspiring homeowners following the much-needed changes to affordability assessment process post 2007/08 financial crash. The hike in stamp duty to 3 per cent on second homes is likely to result in a decrease in the number of parents helping their children onto the property ladder by jointly purchasing a property with them.
Here, the products not only cater for parents and children, but also grandparents, uncles, aunts and siblings who can help a relative in their quest to buy a home. This flexibility is an added bonus. The products are likely to generate considerable interest from the south east of the UK where house prices remain high.
