Halifax bank will now offer first-time buyers a mortgage without them needing to provide their own deposit. However, this is not a return to the days of 100 percent mortgages, as a family member will need to contribute 10 percent of the property price from their own savings. To incentivise the family member and thank them for their cash loan, Halifax will pay 2.5 percent interest annually on the money they pay in. This bonus will be available to withdraw after three years.
Family members who put their money in to this savings account will see their relatives eligible for the Halifax Boost.
This is a three year, fixed-rate deals which has 2.9 percent interest and comes with cash back and zero fees.
To be eligible for the mortgage, either the first-time buyer or the supporting family member will need to have a fee-free Halifax Reward account or an Ultimate Reward current account set up.
The Halifax Boost is available on mortgages of up to £500,000, repayable over a maximum period of 30 years.
After three years, the family member will be refunded their 10 percent with a 2.5 percent interest.
There are some stringent rules that come with the loan.
Missed mortgage payments could see the bank take money from the 10 percent cash from the family member.
If buyers decide to move after taking out the mortgage, it will no longer be valid, as they will not be classed as a first time buyer anymore.
And of course, if house prices fall, borrowers could find themselves in negative equity – which means the value of the home is less than the outstanding amount left to pay on the mortgage.
According to data released by Halifax, the average deposit has risen to £41,009 this year – an increase of £13,950 on the average in 2009.
For those who do have a deposit, what mortgage can a potential buyer get? Use a mortgage calculator to find out.
Your deposit is not the only factor that affects the value of the property you can buy.
How much you earn is also an important factor.
However, it is the case currently that lenders require buyers have a deposit that is at least five per cent of the value of your chosen property.
Of course, putting down a higher deposit means you borrow less and is possible.