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May 20, 2009    

Lloyds TSB launches first-time buyer three-year fix with a twist

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by Gill Montia
Lloyds TSB launches first-time buyer three-year fix with a twist

Lloyds TSB has launched “Lend a Hand”, a new mortgage with first-time buyers in mind.

The three-year fix comes at a rate of 4.39%, with a loan-to-value ratio of 95% and a £995 fee.

However, applicants will need to be on good terms with their nearest and dearest because the offer is subject to the bank taking a legal charge on a savings account belonging to the borrower’s parents, grandparents or friends.

For example, a first-time buyer purchasing a £100,000 property would need a £5,000 deposit and £20,000 provided by parents, grandparents or friends to be held in the Lloyds TSB “Lend a Hand” savings account at a fixed rate of 3.5%.

In addition the combination of the contribution by the parents and the first-time buyer must equal 25% of the property’s purchase price; of which the first time buyer must provide a minimum of 5%.

At the end of the three years, if the combination of mortgage repayments and rising house prices has moved the mortgage from 95% to 90% LTV, the legal charge on the savings account can be removed.

The first time buyer can then remortgage with Lloyds or switch to another provider.

The bank points out that the mortgage deal costs almost £100 a month less than the industry’s average 90% LTV mortgage rate of 5.98%, adding that the guarantee provided by the savings of parents or friends allows it to lend to customers with “less of a credit footprint”.

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1 Comment »

  1. This just makes me so angry! Do people who come up with these ideas live in the REAL world??!!! This is really a deposit of 25%! Ok i have my 5% deposit BUT i have no way of asking my parents, or my only grandparent left for 20%. They just have not got that kind of money to give me.How can my friends lend me money when they are in the same position im in. And i thought the idea of getting a mortgage offer was to prove that you also able to meet repayments. Not my nearest and dearest giving a helping hand. There is no way i would consider this. Guess im just going to keep saving but renting seems the way to get a house at the moment.

    Comment by hannah — May 28, 2009 @ 8:42 pm

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