The HomeOwners Alliance and BLP Insurance have carried out research which illustrates 85% of millennials struggle to save for a deposit for their first house. It is down to this that most of this generation have given up on the idea of becoming a homeowner. Because of this unfortunate reality, banks are looking for different solutions in order to get more first time buyers onto the housing ladder. Looking for alternative opportunities also means that banks will be able to retain the custom of millennials that would otherwise be unable to put down a deposit for a mortgage.
Loughborough is one such bank who have been offering customers other arrangements for mortgage agreements. The Building Society are willing to lend up to 100% of the value of a house, depending on an individual assessment for properties that will be purchased in England and Wales and valued between £90,000 and £300,000.
The amount of money that can be borrowed will be dependent on the applicant’s income after all household essentials and other financial commitments have been deducted. As part of this new scheme offered by Loughborough Building Society there is also a Family Mortgage, which allows family members to assist the borrower. As part of this alternative family members can deposit their savings into a specially designed savings account that can be used as security, equity in a family member’s house can also be used as security by giving a legal charge for the amount of equity in the house that would be equal to a 20% deposit on the property being purchased. These options could also be combined, as long as the minimum of each security option is £5,000.
In these arrangements, where the family has supported the application for a mortgage, the house will wholly belong to the homeowner, with the relative providing support having no claim on the property. As house prices rise and wage level appearing to stay the same, the difficulty to get onto the housing ladder is only expected to get worse.