Vernon Building Society has launched a mortgage range with the intention of helping first-time buyers onto the housing ladder.
The Head Start Mortgage offering sees a joint-borrower, sole proprietor mortgage combined with a guarantor product.
Effectively, it allows one or more family members to support a buyer in two ways: by putting up security against the mortgage and also becoming a joint borrower, which allows an FTB to borrow 100% of the property’s value in their own name.
The security on borrowing over 80% LTV must be cash held in a Vernon savings account or a charge on their property (on borrowing over 75% LTV).
After five years, the ‘family helper’ will receive their funds back or have the legal charge removed from their property, as long as the buyer can afford to take on the mortgage on their own.
The fee-free Head Start Mortgage has a pay rate of 3.40%, which is a 2.7% lifetime discount from the lender’s standard variable rate of 6.10%. The interest rate is also ‘floored’, meaning it will never fall below 2.50% during the discount period.
The mortgage is available on loans from £125,000 – £500,000, up to a maximum 35-year term.
Vernon Building Society head of mortgage and savings distribution at Vernon Building SOciety Brendan Crowshaw says: “We’re thrilled to launch Head Start to help buyers into a home of their own with family support.
“This innovative mortgage helps borrowers to boost their buying power and get over the deposit and affordability barriers to homebuying.”