24 Apr, 2018/ by Homeward Legal /First Time Buyer
The Post Office has launched a range of new mortgages aimed at first-time buyers. Its products will involve family or parents providing financial support for the buyer.
The First Start mortgage boosts first-time buyers borrowing power with the help of a sponsor. The Post Office Family Link mortgage means a first-time buyer doesn't need a deposit. Instead they take out a 90 percent mortgage with the Post Office with their parent or family taking out a secured mortgage on their own property for the remaining 10 percent.
The Post Office carried out extensive research on first-time buyers, revealing that 43 percent struggled to get a deposit together. While an amazing 81 percent of parents said they were happy to provide financial support if they could afford it, the average property for a first-time buyer costs £210,000, meaning they might need a deposit of around £50,000.
That is likely to stretch the finances of even the most comfortably off, while effectively banishing a large portion of potential homeowners from the property ladder.
In fact, four of 10 (41 percent) of those quizzed by the Post Office said they could not offer their offspring financial support to buy a house.
Owen Woodley, chief executive of Financial Services and Telecoms at the Post Office, said: "Buying a property has always been a big commitment, but trends in the current market and the challenges these present to buyers are all things that we know families want to tackle together
"We have spent a lot of time talking to first-time buyers and their families, and we know that parents want to do all they can for their children … highlighted a need for mortgages that allow families to support each other without having to part with savings.
"In response, Post Office has launched two new products with the aim of helping more young people realise their dreams of owning their own home."
The Post Office Family Link Mortgage allows FTBS to take out a 90 percent mortgage and raise the remaining 10 percent of the purchase price on an interest-free mortgage secured against the home of a close family member. For the first five years of the mortgage's life, buyers will make two separate repayments - one to the assistor's mortgage, one to their own loan.
The maximum loan available is £500,000.
The First Start Mortgage allows FTBS to take out a mortgage with a close relative who acts as a sponsor. The sponsor is a co-borrower and has the option to be on the property's title. Again, the maximum loan available is £500,000.