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Springboard Mortgages – Installing a Spring in the Step of First Time Buyers?

Happy family posing with the house sold sign on the floor of their new home

First time buyers often get help with a deposit when buying

No, we haven’t missed a season – we mean a new mortgage product called Springboard Mortgages from one of the high street banks.    It’s yet another product designed to help people step on to the first rung of the housing ladder.

The borrower is allowed to borrow 95% of the purchase price – which is mostly unheard of from lending institutions these days.  In return a ‘Helper’, who can be a parent, friend or relative, puts a sum of money equal to 10% of the purchase price into a locked account for three years.  At the end of the three years, provided the borrower hasn’t missed any mortgage payments, the Helper gets their money back, with interest.

This type of arrangement may be more beneficial to those who want to help their family, but don’t want to make an outright gift of the money.   Another advantage is that it is a set amount of money that is put at risk by the Helper, rather than with a traditional guarantee, where the guarantor effectively agrees to meet the whole of the mortgage, if necessary.

With Cambridge property prices still on the rise, parental assistance with a deposit is becoming much more common and indeed is often the only way young people can buy their first home.   But both parents and children need to be aware of the consequences, and should always take advice before proceeding.

By Helen Murphy, Head of the Residential Conveyancing Team at Cambridge solicitors Barr Ellison.

Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.

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