Good news for those struggling to buy their first home! While it’s still tough to save enough, mortgage options for first-time buyers are improving.

Katie Brain, from financial experts Defaqto, explains: “We’ve seen a huge increase in first-time buyers relying on help from family members to get a mortgage.” In fact, 57% of first-time buyers got help from family in 2023 – that’s 164,000 people!

Family Assistance Mortgages

“Family Assist” mortgages can be a lifeline. These mortgages let family or friends help by guaranteeing part of the mortgage. This reassures the lender and can be the difference between getting approved or not.

Here’s how it works:

Imagine you need a £20,000 deposit for a £200,000 home. With a family assist mortgage, a relative could guarantee that £20,000. This means if YOU can’t keep up repayments, the lender could get the money back from your family member. Importantly, they’re only on the hook for that £20,000, not the entire mortgage!

Three Types of Family Assist Mortgages

• Collateral Charge: Your helper uses the value of their OWN home as a guarantee. They don’t pay anything upfront, but if YOU default, the lender could force the sale of THEIR property to recoup the money.
• Linked Savings Deposit: Your helper puts savings equal to your deposit into an account linked to the mortgage. This money is locked away for a few years, but they’ll still earn interest on it.
• Offset Savings Deposit: Similar to the above, but the interest earned on the helper’s savings goes towards reducing YOUR mortgage interest! It means lower monthly payments for you, but your helper won’t earn interest directly.

Sharing The Burden

Another option is a Joint Borrower Sole Proprietor mortgage. This lets multiple people be borrowers, but only ONE person actually owns the property. It’s a way for family to help with repayments without actually being on the property deeds.

Best Deals Available Right Now

Defaqto’s research highlights some top deals:

Family Assist Mortgages:

• 3-Year Fix: Lloyds Bank and Halifax both offer around 4.75% interest with no fees, but you’ll need your helper to use a linked savings deposit.
• 5-Year Fix: The Family Building Society has a 5.09% rate, but charges a £599 fee. They’re flexible on the type of family help you can use.
• For Larger Deposits (95% LTV): Barclays has a 5.30% rate with no fee, but again requires a linked savings deposit.

Standard 95% LTV Mortgages:

• 3-Year Fix: Halifax leads with a 5.39% rate (no fee) on their ‘Mortgage Guarantee’ product.
• 5-Year Fix: Vernon Building Society offers a tempting 4.94% with no fee, making it cheaper over the long term.

Lenders Are Loosening The Reins

Big names like Nationwide and Skipton are making it easier to borrow. Nationwide now considers loans six times your income, while Skipton’s ‘Track Record’ mortgage is perfect for those who’ve always paid rent on time!

Don’t Delay, Stamp Duty Looms!

Finally, a warning: that sweet Stamp Duty relief for first-time buyers (currently up to £425,000) might be slashed to just £300,000 next year. That means potentially paying thousands MORE in tax! If you’re close to buying, it might be worth doing it sooner rather than later.