In­no­va­tive mort­gage deals to get you on the prop­erty lad­der

Yorkshire Post - Property - - PROPERTY - Franz Muelthaler

WE are first time buy­ers and have man­aged to save a healthy £10,000 de­posit. Will it be enough?

Or­di­nar­ily, I would ad­vise you to save more to give you ac­cess to bet­ter deals. How­ever, I do have bet­ter news for you. The start to 2013 is see­ing a wave of in­no­va­tive mort­gage deals on the mar­ket, some of which could ac­com­mo­date your de­posit.

Bar­clays have launched a first-time buyer fo­cused Fam­ily Spring­board Mort­gage which is avail­able to bor­row­ers with only a five per cent de­posit. Unique to the in­ter­me­di­ary mar­ket, it is a 95 per cent LTV three-year fixed rate. The scheme recog­nises that first time buy­ers, and those wish­ing to move up the prop­erty lad­der, are in­creas­ingly look­ing to close fam­ily for as­sis­tance with se­cur­ing a mort­gage. The scheme al­lows this with the tempt­ing of­fer of a se­cure in­vest­ment that will earn in­ter­est.

It comes in two parts. The bor­rower takes out a Fam­ily Spring­board Mort­gage while the helper opens a Help­ful Start ac­count. The helper then puts 10 per cent of the house pur­chase price into the Help­ful Start ac­count.

Af­ter three years, the helper gets their money back with in­ter­est and the mort­gage be­comes a life­time tracker at 3.99 per cent plus base rate. This could be a great propo­si­tion if you have no means to save more money and can find a guar­an­tor. For in­stance, if your par­ents have money in var­i­ous sav­ings ac­counts we can guess they’ll be earn­ing lit­tle in­ter­est. Help­ing you could be an alternative way to in­vest and with the money back af­ter three years, with in­ter­est, what is there to lose?

How­ever, at 4.69 per cent it’s not the best deal on the mar­ket and if you could save more you would cer­tainly find a bet­ter deal. You also need to be aware that through the Fam­ily Spring­board the Help­ful Starter Ac­count may be at risk if any con­trac­tual monthly pay­ments on the con­nected mort­gage are missed.

Can the Government’s Fund­ing for Lend­ing Scheme really help me get on the prop­erty lad­der?

There has been much scep­ti­cism pri­mar­ily be­cause of the con­sumer trust con­cern­ing banks. The fund in­cen­tivises banks and build­ing so­ci­eties to boost their lend­ing by re­duc­ing bank fund­ing costs.

How­ever, it does de­pend on your own per­sonal sit­u­a­tion. There is no doubt there is more lend­ing. The Bank of Eng­land has re­ported that mort­gage avail­abil­ity has soared to its high­est level since the on­set of the credit crunch nearly five years ago.

This in­crease isn’t nec­es­sar­ily where it is needed though. Pro­por­tion­ally, it hasn’t had a huge im­pact on the in­crease of 90 per cent mort­gage avail­abil­ity. There is no doubt if you have a healthy 20-25 per cent de­posit, a se­cure job, good credit rat­ing and no debts then you’re in a really good po­si­tion to se­cure a great mort­gage.

The choice is less for 90 per cent mort­gage op­tions but there are a few ini­tia­tives. The Government’s FirstBuy shared eq­uity scheme has seen prop­erty de­vel­op­ers and the Government team up to pro­vide 20 per cent eq­uity mort­gages so that only a five per cent de­posit and a tra­di­tional mort­gage to pick up the re­main­ing 75 per cent is needed. This is avail­able on se­lected new houses only and comes to an end in March.

An­other Government and prop­erty de­vel­oper ini­tia­tive is NewBuy, a spe­cial in­dem­nity fund, which sees the Government un­der­write the mort­gage. It’s ap­pli­ca­ble to new builds only and re­quires a five per cent de­posit. Var­i­ous lenders have signed up to of­fer NewBuy mort­gages of­fer­ing 95 per cent LTV loans so it’s a com­pelling of­fer if you have a lim­ited de­posit. I would ad­vise you dis­cuss th­ese in­cen­tives with an in­de­pen­dent mort­gage ad­viser who will be able to clear any con­fu­sion you may have and find the right deal for your per­sonal sit­u­a­tion.

Franz Muehlthaler is mort­gage ad­viser for Hol­royd Miller Prop­er­ties in as­so­ci­a­tion with Reach 4 Mort­gage So­lu­tions

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