What is a family springboard mortgage, and can it provide the route to home ownership to those who don't have a deposit? The family springboard mortgage is another term for a guarantor mortgage, and is currently offered by Barclays. How does it compare to similar mortgage products currently on the market?
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- Guarantor mortgages: everything you need to know
Guarantor mortgages are becoming popular as the alternative to the once-popular 100 per cent mortgages or no deposit mortgages. Like those mortgage products, they allow you to buy a home with no deposit, but unlike the (now defunct) no deposit mortgages, the bank requires the buyer to enlist a family member to put down their savings as a financial safety net for a fixed time period at the start of the mortgage.
The good thing about these mortgages is their attractiveness to family members; the parents (or other family members who have agreed to help) are guaranteed to get their money back, with interest, at the end of the agreed term, unless the buyer defaults on the payments.
The Barclays Family Springboard Mortgage offers some additional flexibility some of the other products in this category don't offer. Firstly, the scheme does not require the helping party to be a relation – it can be a friend, a partner, or anyone who wants to help. Secondly, the maximum mortgage term is 35 years, which will make repayments more manageable for cash-strapped applicants, at least in the shorter term. And thirdly, the Helpful Start account the guarantor will need to keep their savings in for the five-year term is free of charge, not reserved for existing Barclays account holders, and comes with a not-too-bad 2.25 per cent interest rate. They will need to put in 10 per cent of the final price of the property you're buying.
Intrigued? This really is a good option if you don't have a deposit, but have family members/friends with savings they don't mind keeping in a Barclays savings account for five years.
We would say, though, that you need to be careful with the 35 year maximum mortgage term. While the smaller mortgage repayments can seem like a relief, the longer your mortgage term, the more interest you'll be repaying over time. So, even if you do take out the maximum term to begin with, you should consider overpaying (within allowed limits and only when you're able, of course) or eventually remortgaging to a shorter term, when your earnings allow it.
The main alternative to the Barclays family springboard mortgage is the Halifax Family Boost Mortgage, which requires parents to keep the deposit amount in a savings account for three years, while earning an interest rate of 2.5 per cent gross/AER. They'll also need to open a Halifax Reward or Ultimate Reward current account, which will come with a monthly fee.
Want to know more about the different paperwork and additional fees you'll need to know about? Read our guide to mortgages for first-time buyers.