New mortgage gives first-time buyers helping hand

At a time when most deals for first-time buyers have dried up, many lenders are asking for deposits in the region of 25%.

By using a parental guarantee, combined with a collateral charge over some of the equity from the parent’s home, Bath Building Society said it was leading the way by offering more to first-time buyers.

The mortgage can also be utilised by second-time buyers, wishing to take their next step up the ladder. The mortgage will enable buyers to borrow up to 90% of the purchase price of their home.

In many cases the buyers will also be able to rent out an additional room in the property to a lodger to help cover the mortgage repayments.

Malcolm Graham-Jones, Head of Lending at Bath Building Society, said: "Now that prices have dropped back in the property market, this is a good time for buyers to reach the first, or their next, step on the housing ladder.

"Until now, the problem they have faced is a lack of mortgage funding, which means that lenders will only provide mortgages to those with the highest deposits.

"Also, with lower interest rates in the market, and the value of properties well below their peak, we can envisage a number of people wanting to take advantage of this product."

Bath Building Society is well-known for innovative mortgage products – in 2006 it launched the pioneering Buy for Uni mortgage, which allows students to purchase a property with their parents acting as guarantors for the loan.

Many of the principles utilised in this product have been adapted to the Parental Assisted Mortgage Scheme.

Have your say on this story using the comment section below