After a 100% home loan?

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Barclays bank has described their Family Springboard that offers a 100% home loan as a ”mortgage that allows family members to help each other get on or move up the property ladder”.

Here at BeeMyMinder, we know that finances and getting a mortgage can be confusing, and that’s why we’ve decided to give you a helping hand. Keep reading for more information on what the Barclays Family Springboard is, and how it actually works.

For buyers with little or no deposit, this could be the perfect way to take out a mortgage for their first or future home.

  • The scheme is available for first-timer buyers and movers.
  • The maximum house price you can purchase is £500,000.
  • You pay a fixed rate on your mortgage for the first three years.
  • Your helper pays 10% of the property’s value into a related savings account and leaves it there for three years; think of it as a security deposit.
  • The Family Springboard has been designed to help buyers with purchasing their first home, or move up the property ladder, so you can only have one Springboard Mortgage.

Launched in 2013, the criteria for the Family Springboard were slightly different. Whilst the family member could still lend the additional 10%, the buyer had to contribute a 5% deposit. However, to celebrate its third birthday, the Springboard Mortgage has now changed to help those without a deposit already saved.

With house prices on the rise, the Bank of Mum and Dad is fast becoming one of the main ways in which first time buyers take their first steps onto the property ladder. A recent study by Legal and General that the Bank of Mum and Dad will help 305,900 of their loved ones to buy a home in 2016.

A buyer without a deposit could get a three-year fixed mortgage rate at 2.99%, but with the 5% deposit and the 10% helper contribution the interest rate is fixed at 2.79%.

But what happens to the money you’ve been leant? Don’t worry; it’s not gone forever. If you keep up mortgage repayments every month for the first three years, the Helpful Starter account will be automatically closed and the funds will be released back to your helpers. Which would have earned base rate plus 1.5% return.

However, if you do not pay the mortgage each month, then Barclays reserves the right to extend the term that the deposit is held for, so make sure that you keep up repayments.

But what if the Barclays Springboard Mortgage isn’t for you? Then all is not lost; we have further reading on other types of mortgages that are available.

We would recommend that before applying for a mortgage, you speak to a Financial Advisor. There are many independent, FCA-approved companies available, and banks do have their own specialist’s in-store that can help.

As with any large financial investment, you need to budget accordingly. Keeping a proper plan for the duration of your mortgage is the best way to make sure your home isn’t repossessed should you come into any financial difficulties.

Hopefully you’ve found this article helpful, and if you have any questions; or want more information on our free financial planning and protection service, then get in touch. We’d love to hear from you.

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