Barclays Bank has this week introduced a new 100% loan-to-value mortgage, aimed at helping struggling first-time buyers get onto the property ladder. It is thought to be the first such deal from a major lender since the credit crunch and financial crisis of 2007-08.
However, Barclays’ Family Springboard Mortgage requires the buyers or their relatives to deposit cash equal to 10% of the property’s value in a special savings account for the first three years of the loan.
Raheel Ahmed, head of Barclays Mortgages said: “With over a third of young people still turning to their family for help with buying a home, we have increased the accessibility of the Barclays Family Springboard Mortgage. We want to offer more people a way to get on the property ladder and to walk through the door of their first home earlier than they perhaps thought.”
Matt Sanders, head of money at Gocompare.com, said potential borrowers should look at the detail of the Barclays offer. “While Barclays’ bold move to bring back 100% mortgages may help those with generous, financially secure parents, it isn’t the holy grail that many first-time buyers are hoping for,” he said.
“Buyers will still need to find a helper able to stump up 10% of the house purchase price to lock away in a Barclays’ savings account for three years. Ultimately, meaning that this is a new mortgage brought to you by Barclays and the bank of mum and dad, which still doesn’t help the majority buy their first home.”
Jody Baker at Comparethemarket.com added: “Loans of this sort require prudence on the part of the borrower, ensuring that they have not over-extended themselves. We would always recommend to anyone that is taking a mortgage works out a detailed budget of their monthly household expenses and assesses in some depth their incomings and outgoings.
“Equally, we would expect these products to remain few and far between at the fringes of the mortgage lending universe by necessity.”