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Lloyds TSB offers 95% mortgage to first-time buyers

The new “Lend a Hand” mortgage from Lloyds TSB allows first-time buyers to get a foot on the property ladder with a deposit of just 5%. But it comes with a catch…

Lloyds TSB (www.lloydstsb.com) has given hope to first-time buyers with its new “Lend a Hand” mortgage. The three-year deal is available at 95% loan-to-value (LTV) and comes with a low rate of 4.39%.

However, to qualify for this mortgage, the first-time buyer must call upon the Bank of Mum and Dad and convince them to put savings worth 20% of the property’s value in a linked Lloyds TSB savings account.

Lloyds TSB will pay a competitive 3.5% interest on this cash, fixed for three and a half years, but will take a legal charge on the savings account. This means if the borrower defaults on the mortgage, the bank can use money from this account to make up the shortfall.

Stephen Noakes, commercial director of mortgages at Lloyds Banking Group, explained: “The legal charge on the parents’ savings account means we can offset the risk of lending at this level. It also gives parents a way of helping their children without actually having to write the cheque.”

Research from Lloyds TSB found that 68% of parents would be more likely to help their children get on the property ladder if they could retain control and earn interest on their savings.

Chris Eagle, commercial manager at CreditChoices.co.uk, said: “Experts predicted that mortgages making more innovative use of parental assistance would appear on the market, and they were right.

“The introduction of this mortgage is exactly what the first-time buyer market needs, and hopefully we will soon see other providers follow with original products of their own.”

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THINK CAREFULLY BEFORE SECURING ANY DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.