Buckinghamshire Building Society has launched a mortgage for first-time buyers with no deposit but family members who are willing to provide security.
The Family Assist mortgage is available to first-time buyers who are struggling to raise a deposit. They can borrow up to 100 per cent of the purchase price, with parents or grandparents providing the additional security using the equity in their property.
Tim Vigeon, head of lending at the Buckinghamshire, said: "We have always been keen to support the Bank of Mum & Dad to help their children onto the property ladder.
"We already accept family gifts and family loans backed with a second charge to help first time buyers raise the necessary deposit on their home. The Family Assist mortgages offer a new option and demonstrate our commitment to look at innovative new ways to help first time buyers achieve their home ownership dream."
To be eligible, parents or grandparents must have minimum remaining equity of £130,000 and the maximum loan to value is based on the number of bedrooms in their house.
Rates for the mortgage are 3.89 per cent fixed for three years, or a 3.19 per cent three year discount. Both have product fees of £850.
Ray Boulger, technical director at mortgage broker John Charcol, said the mortgage was a good example of smaller building societies bringing innovation to the market.
He said: "We know that raising a deposit is a huge problem for borrowers, who could otherwise afford a mortgage. Here we see another small building society tackling this."
He added that the rate was good, and this was a good way for families with equity in their homes to support their children or grandchildren without borrowing extra from their property.
"The alternative for those with cash savings is the Woolwich Springboard mortgage," he said. This mortgage ties up family savings for three years, but they are paid interest on the savings during this time.