Family Linked Mortgages
A family linked mortgages can offer home buyers a different type of option where a family member is willing to help a homebuyer.
With these deals, a family member, normally a parent(s) or grandparent(s) either put their savings into an account linked to the child’s mortgage or uses equity in their own home in lieu of a deposit.
In the case of offset mortgages linked to a relative's savings, the children can’t access the money, but it effectively serves as a deposit on the property they want to buy. It also lowers interest charges, as the savings balance is deducted from the value of the loan.
The advantage of this type of deal is that the family member doesn’t have to give their money away, though they will have to leave it locked up for an extended period which varies from
provider to provider but it will eventually be available to them again in the future. In some cases interest is paid on the savings too.Where a sponsor uses the equity in their property this can remove the need for an applicant to have a deposit of their own or they can use this to add to their own deposit to get a lower rate of interest. Typically a charge is taken over both properties and this can remain in place for an extended period.
In some cases both the sponsor and the applicant are responsible for ensuring that repayments are made on the new property being purchased.
In most cases with this type of mortgage, the puchasers need to be able to afford this mortgage on the basis of their own income.
A variety of lenders now provide family linked mortgages and above you can see a video explaining how Family Building Society's Family Mortgage works. If you think this type of mortgage might be right for you or a relative of yours why not call us now so that we can discuss your circumstances and advise you which of the many lenders in the market with this type of offering might be right for you. We can also give advice to both applicants and sponsors on the wider issues to consider.
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