New 95% mortgage launched for first-time buyers
Wednesday, 31 August 2011 2:41 PM
Principality, Wales's largest building society, has launched a new 95 per cent mortgage designed to help first-time buyers who are struggling to raise a large deposit.
The Assisted First-Time Buyer deal allows family members to use their savings to secure the mortgage of their first-time buyer child or relative.
The combined total of the buyer’s deposit (which can be a minimum of five per cent) and the family’s savings must be equivalent to at least 25 per cent of the property’s value.
Under the terms of the deal, Principality will take a legal charge over the Assisted First-Time Buyer Savings Account, with 3.75 per cent AER, fixed until 31 August 2015. The family member will not be allowed access to their money during this time.
After 31 August 2015, if the mortgage has been reduced from 95 per cent to 90 per cent of the original value through repayments and/or house price fluctuations, the legal charge on the savings account will be lifted, allowing the family member access to their savings.
And it’s not only the parents of first-time buyers that can be involved: the deal is extended to any family member or friend that wishes to act as the investor.
Christopher Johnson, mortgage manager at Principality, said: "The advantage of allowing parents to use their savings as security for the mortgage is that they retain ownership of their money.
“They will continue to earn interest on their savings, while the child gets access to mortgage rates usually available to those with a larger deposit."
The Assisted First-Time Buyer mortgage is available through any of Principality's 52 branches across Wales and the borders.
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