However, buyers who want to take advantage of the Lend a hand deal will not only need to approach with a minimum 5% deposit, but also need to find another 20% from parents, grandparents or friends.
The buyer’s deposit and additional savings must make up 25% of the property’s value and the savings will remain as the property of the relative or friend, but must sit in a Lloyds TSB account held under legal charge for 42 months.
At the end of the deal, if the combination of mortgage repayments and rising house prices has moved the mortgage from 95% to 90% LTV, the legal charge on the savings account can be removed and the first time buyer can operate their mortgage account independently, either on Lloyds TSB’s standard variable rate, by switching products or remortgaging.
Stephen Noakes, Commercial Director of mortgages at Lloyds Banking Group, said: “Market conditions mean virtually no 95% loan to value mortgages are available at the moment, while the few that are come at a high price with stringent credit requirements. The legal charge on the parents’ savings account means we can offset the risk of lending at this level to offer a realistic and affordable option for first time buyers. It also gives parents a way of helping their children without actually having to write the cheque.”
