There are only two lenders who offer 100% mortgage supported by parents.
They are Aldermore Bank who launched their mortgage in 2011, which has just been joined by the Bath Building Society.
Both lenders operate a similar scheme, where a 100% mortgage is advanced to the purchasers but security is provided by a second charge of 25% of the purchase price on the parent’s property. The benefit of this route to the parents is that they do not need to fund any deposit money or meet any monthly payments.
The drawback is that in the event of non-payment of the son’s / daughters mortgage their property can be repossessed. I would always recommend the parents take independent legal advice regarding the implications of the second charge.
I have listed below brief information regarding both lenders. (Based on a purchase price of £120,000)
Aldermore Bank Bath B/Society
Rate 5.48% (6.00% apr) 5.29% (5.80% apr)
Fixed 3 years 3 years
Arrangement Fees £1298 £700
As an alternative to these schemes is the Woolwich Family Spring Board Mortgage or a straight forward 95% mortgage provided by Monmouthshire Building Society, Principality Building Society or Leeds Building Society.
Why not contact us to discuss your options. We can then review your circumstances and match you to the most appropriate lender.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
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