Mortgage Product of the Month- The family mortgage - 95% LTV mortgage
Caz Blake-Symes • October 22, 2020
Introducing the Family Mortgage
At the moment the number of mortgage products available through all lending sources has dropped dramatically. However, as fully independent Mortgage Brokers, we are constantly evaluating the market looking for the best products available.
We have chosen this exceptional product this month to highlight to our clients offering excellent opportunities for families to be able to support First-time Buyers onto the property ladder with only a 5% deposit! This product is the Family Mortgage.
The principle behind the Family Mortgage is simple.
It helps families help family members take the first step on the property ladder. As long as you have at least a 5% deposit (which can be wholly gifted), and you have family that can give the lender additional security by using their savings or having a charge on their own property, the lender may be able to help.
Family members can help you by:
1. Putting their savings in Family Security Account, which earns them interest too
2. Providing a charge over some of the value in the property, so there is no need for them to use their savings
3. Placing their savings in a Family Offset Account at the start of the mortgage. This reduces the amount of the mortgage on which we charge interest by the amount held in that account. This means family members will not earn any interest on savings in the Family Offset Account.
The additional security family members provide will need to bring the total security we have (your deposit and the help from your family members in one or more of the ways we list above) up to 25% of the property value.
What next?
You probably have a lot of questions about how the Family Mortgage could work for you - we are here to help! The benefit of using Bristol, Bath or Exeter Mortgages Online is that your supported from the very first meeting through to completion by our excellent administration team.
There are various calculations that can be made regarding the Family Mortgage and one of our experts Mortgage Advisers will gladly give you a full illustration showing the calculations for all those involved.
Things to consider
We know there is lots of things to think about with a Family Mortgage and getting some help from your family to buy a home. It is important both you and family members understand that by offering security for your mortgage with their savings or by placing a charge on their property, family members are responsible for making up any shortfall if you sell your house for less than the mortgage value, which is known as negative equity.
Working with family members helps buyers:
- get lower interest rates, meaning lower monthly payments
- pay interest on a smaller amount of the mortgage, meaning lower monthly payments
- increase your buying power when choosing a property to buy.
- put assets to work for the buyer as security for the mortgage
- help the next generation own their own home without giving the money as a gift
Here at Bristol, Bath and Exeter Mortgages Online, we believe that this is a truly excellent product. However, it needs to be fully considered by all family parties involved. Therefore, we suggest that you book an appointment to discuss your specific requirements in detail, including a full illustration by Phil, Paul or Chris to ensure that this product is right for you.
For further details about the service we offer as a fully independent mortgage brokers or any other mortgage information book your FREE CONSULTATION with one of our expert Mortgage Advisers please contact us
Bristol Mortgages Online www.bristolmortgagesonline.com
Tel 0117 325 1511
Bath Mortgages Online www.bathmortgagesonline.com
Tel 01225 584 888
Exeter Mortgages Online www.exetermortgagesonline.com
Tel 01392 690 888
Email info@swmortgages.com
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Adapted from Zoopla’s April 2025 Housing report I mage: The analysis uses average house prices from the house price index and for first-time buyers to assess mortgage payments at different mortgage rates applied to a 30- year mortgage, at different loan-to-values. One emerging trend that we expect to positively support market activity in the coming months is a relaxation in how lenders assess the affordability of new mortgages. While buyers focus on the mortgage rate they will pay, lenders also check whether the borrower can afford a 'stressed mortgage rate' at a higher level than the borrower will pay. While the average 5-year fixed rate mortgage is around 4.5% today, many lenders are currently 'stress testing' affordability at 8-9%. This makes it harder to secure a mortgage without a large deposit. If average mortgage stress rates were to return to pre-2022 levels of 6.5% to 7%, this would deliver a 15-20% boost to buying power. An average first-time buyer with mortgage repayments of £1,020pcm at a 4.5% mortgage rate would typically have to prove they could afford monthly repayments of £1,550pcm at an 8.5% stress rate. If the stress testing is relaxed to 6.5%, repayments would fall to £1,275pcm, boosting buying power. It's a similar pattern for the average homeowner, while the actual impact will vary by lender and type of borrower. This change would consequently supporting demand and sales volumes, helping to clear the stock of homes for sale, rather than boosting house prices. Other existing rules and regulations that remain in place will continue to impact the availability of mortgage finance. Comment from Phil Clark “This is potentially very exciting news and will give borrowers a greater choice of products if these rules are relaxed. Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about the Mortgage and Protection products we offer, please visit www.bristolmortgagesonline.com Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
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Adapted from BBC Article by Kevin Peachey, Cost of living correspondent 13 February 2025 Two major lenders launched mortgage deals on Thursday with interest rates of less than 4%, as competition picks up in the sector. The prospect of further cuts in the base rate by the Bank of England has given mortgage providers confidence to reduce their own rates. But the attention-grabbing sub-4% deals by Santander and Barclays will not be available to all borrowers, particularly first-time buyers, and may come with a hefty fee. The return of such deals might prompt other lenders to follow suit after a period of tepid competition. Nationwide, the UK's biggest building society, has said it will reduce some of its rates on Friday. Mortgage deals with interest rates below 4% have not been seen since November. Across the whole market the average rate on a two-year fixed deal is 5.48%. The typical rate on five-year deals is 5.29%, according to latest figures from Moneyfacts. Time to decide Some tracker and variable rate mortgages move fairly closely in line with the Bank's base rate, which was cut to 4.5% a week ago. However, more than eight in 10 mortgage customers have fixed-rate deals. The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it. About 800,000 fixed-rate mortgages, currently with an interest rate of 3% or below, are expected to expire every year, on average, until the end of 2027. That means a higher monthly bill for many homeowners on their next renewal, but there are signs that the rate they could pay is on its way down. Bank of England governor Andrew Bailey said the interest-rate setting committee expected to be able to cut rates further "but we will have to judge meeting by meeting, how far and how fast". This will affect savers who are seeing lower returns, but could bring better news for borrowers. The Bank's next rates decision is on 20 March. Message from Phil Clark “Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about Mortgage and Protection please visit www.bristolmortgagesonline.com