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”.