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Loan to help parents get kids on property ladder

Thursday, 13 January 2011 5:11 PM

A financial services group has announced that it will offer loans of up to £50,000 to the parents of first-time buyers, in a bold attempt to boost the UK's struggling property market.

Hitachi Capital has joined forces with Barratt, the country's biggest house builder, to give a helping hand to those keen for their children to obtain a home of their own.

The group's £1 billion fund will give parents the chance to take out a 12-year unsecured loan, allowing them to help their offspring onto the property ladder without the need to remortgage or put a second charge on their own home.

One of the scheme's main aims is to bring first-time buyers back to the market, after they have been priced out by mortgage lenders demanding deposits of as much as 20 per cent.

"This product is ideal for parents who have sufficient income to service a loan but no available capital, or people who have capital which is tied up and which they do not want to access in the short term," said Paul Walker, sales director for Barratt Northampton.

Under the Hitachi Capital agreement, the average buyer will only need to raise a five per cent deposit before purchasing an 80 per cent mortgage from one of many high street lenders.

The remaining 15 per cent of the Barratt property's purchase price can then be covered by an unsecured loan from the company to the buyers' parents or legal guardian.
 

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