Barclays have brought back the 100% mortgage for the first time since the recession in a bid to help first time buyers
With more than 35% of first time buyers asking their parents for help when it comes to buying their first home, Barclays has decided to bring back the 100% mortgage.
Barclays has removed the need for a 5% deposit, which is the biggest barrier to people getting on the property ladder. Instead, they ask that a ‘helper’ usually the buyer’s parents, have 10% of the value of the property in a deposit account, which is then returned with interest in 3 years as long as the borrower doesn’t miss any payments.
This means that first time buyers with no cash deposit can now get a 3 year, fixed rate deal at 2.99%. Barclays are calling it their ‘family springboard’ mortgage.
The maximum loan has also risen to £275,000 for people earning more than £50,000 per year. Customers earning more than £50,000 will be able to borrow up to 5.5 times their income.
Barclays is also taking part int he Government’s Help To Buy scheme, which enables people to buy a property with just a 5% deposit, but even that is proving tricky for over 25% of first time buyers who rely on the bank of mum and dad to get them onto the property ladder. The new deal means the bank of mum and dad don’t actually have to part with their cash, but instead just agree to put it in a deposit account for 3 years, where it will earn interest before being returned, so it seems to be a better option for lots of potential house buyers.
What do you think? Is it a good idea to offer 100% mortgages or is it too risky? Let me know in the comments below or on our Facebook page.