There are! While regular mortgages with slightly higher income multiples or slightly lower deposits have been around for decades, there are now more dedicated first-time-buyer-focused mortgages than ever. And some of them are quite innovative too.<\/p>
Here are some of the main options that have emerged:<\/p>
Let’s take a closer look at each: how they work, their pros and cons plus who’s offering them.<\/p>
These mortgages allow family to support you, without actually giving you loads of money, or going full guarantor. They simply put part of their savings into a dedicated account for an agreed period. It’s locked in there, acting as security for the lender. At the end of the agreed period, your family member gets their money back plus interest. The family member isn’t named on the mortgage.<\/p>
Lloyds’ Lend a Hand mortgage<\/a>.<\/strong> No deposit needed, though you can put one up if you want to \/ are able. A family member puts savings (to the value of 10% of the property) into a dedicated account for 3 years where it earns interest. At the same time, you’re on a 3-year fixed rate. After the 3 years, the family member can withdraw their savings and the interest it has accrued (they can even syphon the interest off during the 3-year term if they wish).<\/p> There are both “standard” mortgages where some or all of the deposit has been gifted by a family member, and there are specific mortgage products designed around gifted deposits. In the “standard” case, lenders may simply require a letter from the gifter confirming that it’s a true gift (and they aren’t claiming any right over the property).<\/p> At the more innovative, dedicated-product end of the spectrum, are schemes where a family member is able to borrow more on their own mortgage in order to help you with the deposit on yours. These are the products we’re focusing on in the pros and cons below. The family member won’t be named on your mortgage or on the title deeds for the property.<\/p> Lloyds’ First Home Deposit Gift scheme<\/a>.<\/strong> An existing Lloyds mortgage holder who wants to help you with your deposit can borrow from \u00a35,000 up to 85% of the value of their home.<\/p> With a guarantor mortgage a family member commits to repaying the mortgage in the event that you don’t. The guarantor will often be named on the mortgage. They’re jointly liable (with you), but their name won’t be on the title deeds for the property.<\/p> When you see a 100% mortgage promoted in the UK, it’ll usually (but not always) involve a guarantor. Skipton’s Track Record mortgage is an exception \u2013 using your renting track record as reassurance \u2013 though it has stricter income-multiple requirements and is unavailable on new build flats or in Northern Ireland. <\/p> Swansea Building Society’s guarantor mortgages<\/a>.<\/strong> 20% deposit required. The guarantor must be able to afford the monthly repayments from their income (not savings).<\/p> Lots of mortgage providers support schemes such as Shared Ownership<\/a> or First Homes<\/a>. A few build dedicated mortgage products specifically around them (for example Leek Building Society’s Shared Ownership mortgages), rather than applying scheme eligibility to a pre-existing mortgage. These mortgages bake in scheme-specific criteria (like Shared Ownership’s minimum share size) from the outset.<\/p> Shared Ownership<\/a><\/strong>. You buy a share of a property (typically 10\u201375%) and pay rent on the rest, needing only a deposit on your share.<\/p> No guarantor or scheme required here. These are traditional mortgages but pitched at first-time buyers due to low loan-to-value requirements. The deposit comes entirely from the buyer’s own savings, and affordability is assessed on their own income, outgoings and credit history.<\/p> Lloyds \u00a35,000 Deposit mortgage<\/a>.<\/strong> A 5-year fixed rate mortgage where only \u00a35,000 deposit is required, on a property worth up to \u00a3300,000. It’s aimed primarily at renters who’ve built up a good track record of paying significant monthly housing costs.<\/p> Again, no guarantor or scheme required here. Unlike the low-deposit options above, which are about helping homebuyers where the deposit is the biggest hurdle, these products are about helping homebuyers where earnings are the biggest hurdle.<\/p> The Bank of England\u2019s Financial Policy Committee asks banks to only offer more than 4.5x applicant income on at most 15% of the mortgages they issue. As a result, some lenders create specific products where they will go higher on income multiples.<\/p> Lloyds’ First Time Buyer Boost mortgage<\/a>.<\/strong> You could borrow up to 5.5x your annual household income. You’ll need a 10% deposit and a total household income over \u00a340,000.<\/p> It’s great to see that the UK market has evolved to the point where there are several lenders looking for ways to help out first-time buyers. That’s especially true given notoriously high UK property prices!<\/p> With any mortgage where you’re putting down a limited deposit (or no deposit at all), it’s easier to slip into “negative equity” \u2013 where what you owe is greater than the value of the home. That’s a key consideration (amongst others) to be aware of before taking the plunge with your first home and your first mortgage.<\/p> A 95% LTV (loan to value) mortgage means you provide a 5% deposit and then take out a mortgage for the remaining 95% of the property\u2019s purchase price.<\/p><\/p>\n <\/div>\n <\/div>\n<\/div>\n Yes. There are now a range of ways they can support you that go beyond simply giving you a lump sum. A good example is the Lloyds Lend a Hand mortgage<\/a>, where by ring-fencing part of their savings in a dedicated interest-paying account, parents can help you buy your first home even if you have little or no deposit.<\/p><\/p>\n <\/div>\n <\/div>\n<\/div>\n Lenders will always ask you where your deposit has come from (and you should answer honestly). Gifted deposits are commonplace and not a problem for lenders, but the gifter may be asked to declare that they don't expect any claim over the property. <\/p><\/p>\n <\/div>\n <\/div>\n<\/div>\n Yes, family members can be a guarantor when you\u2019re buying a home, subject to a lender supporting this.<\/p><\/p>\n <\/div>\n <\/div>\n<\/div>\n Government support for first-time buyers includes the First Homes scheme, Freedom to Buy, shared ownership and LISAs<\/a>.<\/p><\/p>\n <\/div>\n <\/div>\n<\/div>\n<\/div>\nGifted deposit mortgages<\/h3>
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Guarantor mortgages<\/h3>
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Government scheme-linked mortgages<\/h3>
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Standard low-deposit mortgages (90\u201395%+ LTV)<\/h3>
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High income-multiple mortgages (5x\u20135.5x+ deals)<\/h3>
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Frequently asked questions<\/h3>
What is a 95% LTV mortgage?<\/h4>\n
Can my parents help me get a mortgage?<\/h4>\n
Do I need to declare a gifted deposit?<\/h4>\n
Can a family member be my guarantor?<\/h4>\n
Is government support available for first-time buyers?<\/h4>\n
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