Barclays has today announced that it is to offer a 100% mortgage-a three-year fixed rate deal for buyers with no deposit
However, there is a catch!
The lender is offering the deal at 2.99% for buyers who earn more than £50,000 per year.
Celebration
Barclays has made changes to its Family Springboard Mortgage, on the third anniversary of its launch. Previously however, borrowers were required to put down a deposit of at least 5%.
As part of the deal, family or friends of the borrower will be required to deposit the equivalent of 10% of the property’s purchase price into a savings account. This must then be kept there for at least three years.
At the end of this period, the family member or friend will receive this money back, with interest, equivalent to the base rate plus 1.5%.
Barclays offers 100% mortgage
Affordability
Jody Baker, Head of Money at comparethemarket.com, noted, ‘the government’s commitment to building new starter homes, the introduction of the Help to Buy ISA and changes to stamp duty, has shown its efforts to make housing more affordable to first time buyers and its encouraging to see the industry getting in on the act too.’ [1]
‘Whilst Barclays’ move adds a viable option for those looking to buy a home, there is, of course, a note of caution. Loans of this sort require prudence on the part of the borrower, ensuring that they have not over-extended themselves. We would always recommend to anyone that is taking a mortgage works out a detailed budget of their monthly household expenses and assesses in some depth their incomings and outgoings. Equally, we would expect these products to remain few and far between at the fringes of the mortgage lending universe by necessity – after all, it was riskier lending which caused the financial crisis in the first place.’[1]
However, buying agent and housing market commentator Henry Pryor, was less complimentary, describing the move as, ‘a financial grenade.’[1]
[1] http://www.propertyreporter.co.uk/hero/the-100-mortgage-returns.html