First-time buyers will be able to receive a 100 per cent mortgage from Lloyds bank for the first time since the financial crisis. The caveat being that the lender must be assisted by a family member.
The so-called “Lend a Hand” deal will allow first-time buyers to borrow a maximum of £500,000 to purchase a property without any lump sum required for a deposit. Most mortgage providers demand at least five per cent of a property’s asking price before approving a mortgage.
The lack of deposit will help first-time buyers greatly as this original saving is seen as the largest roadblock. The average deposit stands at just over £33,000 outside London – shockingly, within London deposits can be expected at just over £110,000.
This deal shows a major effort on Lloyds’ part to branch out into the first-time buyer market – even undercutting Barclays similar “family springboard” scheme.
In order for first-time buyers to be granted Lloyds’ offer, a parent, grandparent, or other close family members must deposit 10 per cent of the property value into a Lloyds savings account.
The idea is that families can now assist their property purchasing relative while also remaining in control of their savings.
Group Director of Lloyds Banking Group, Vim Maru, has said: “We are committed to lending £30 billion 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.”