First Time Buyers are in the limelight again this week as lenders adjust criteria in order to assist. The Saffron Building Society offers a 95% loan to value product which used to require the customer to have a twelve months rental history with a professional letting agent. The lender has now removed this requirement entirely and the product is now available to those living with parents! Even better news in that this product has no redemption penalties at any time, should the customer wish to change providers.The ‘Bank of Mum & Dad’ continues to be a major player in a large number of enquiries received at AToM HQ. Many options are available to first time buyers and parents, including guarantors, cross collateral charges (using parent’s property as additional security and grandparents in some cases!), gifted deposits or equity and more. It is important to note that, in most cases, a guarantor must be a blood relative.
One such example causing quite a stir is provided by the Coventry Building Society. Called the ‘step up’ mortgage, this allows parents/guardian or close relative to also add in their income when calculating the loan amount available to the applicants. The lender then deducts the parent’s annual mortgage commitment and any other credit to reach a total loan available (this cannot exceed 7 x the First Time Buyers income). The product requires a ten per cent deposit and all parties are named on the mortgage deed. Other terms and conditions apply, but these show the innovative levels lenders are considering to assist people purchasing properties and, for this, they should be applauded.Let’s also not forget that the number of lenders now offering the Governments Help to Buy Mortgage Guarantee schemes has expanded. Over the last few weeks, we have seen Aldermore, Woolwich (Barclays), Virgin Money and Santander all launch products to assist those with a 5% deposit. In addition some lenders who are not on the Government Help to Buy register have also been offering good alternative product ranges, including remortgage options.
All in all, the number of options available to those with a small deposit or who are a first time buyer is on the increase and that can only be a good thing for the wider market!