Lloyds Bank has launched a new mortgage for first-time buyers that will also benefit the Bank of Mum and Dad.
The Lend a Hand mortgage means a FTB doesn’t need to find a deposit so long as a family member has the savings to provide security for the loan. That way, the Bank of Mum and Dad keeps earning interest on their own savings while boosting their offspring’s chances at securing their first property.
The three-year fixed rate product comes with a 2.99 percent mortgage rate while the savers can tap into a savings rate of 2.5 percent.
Lloyds launched the product on the back of research from the bank that shows the No.1 life goal of almost half of all 18-35-year-olds (43 percent) is to buy a house. More than two in five parents (41 percent) want to help out financially but are concerned about their own financial position in later life.
Vim Maru, Group Director, Retail at Lloyds Banking Group, said: “We are committed to lending £30billion to first-time buyers by 2020 as part of our pledge to help people and communities across Britain prosper – and Lend a Hand is one of the ways we will do this.
“At the heart of this market-leading product is helping to address the biggest challenge first-time buyers face getting on to the property ladder, while rewarding loyal customers in a low rate environment.
“Although times have changed, children still have a similar ambition to their parents – to own their own home. Lend a Hand helps parents to invest in their children’s future and get the best return on their cash.”
The research shows that parents have average savings of £43,416 – 30 percent more than the average deposit needed.