Hitachi Capital and Barratt Homes have teamed up to offer loans of up to £50,000 to parents of first-time buyers, buying a new home from the Barratt Group, in a ground-breaking attempt to lift the housing market.
The product is the only one of its kind currently being offered and is specifically designed to address the current mortgage restrictions. There are many first-time buyers who are largely dependent on support from their parents because they do not have the 20 — 25% deposit which lenders now require. Under the scheme a typical buyer only needs to raise a 5% deposit and with 80% mortgages available from a number of lenders the remaining 15% can be met through an unsecured loan from Hitachi Capital to the buyer’s parents or legal guardian.
Hitachi are offering unsecured loans of up to £50,000 for a period of 12 years at a fixed rate of 5.4 per cent, with no early repayment charges and unlimited overpayments allowed at any time during the agreement, without penalty.
The source of the balance of the purchase price will need to be disclosed to any Lender, as per the CML Handbook, but with no charge being secured on the property and the loan in the parents’ names this should not have any effect on the Lender’s decision.
Mark Clare, Chief Executive of Barratt Developments PLC comments:
"We are genuinely excited about this tie-up with Hitachi Capital because it gives parents a low-risk way to reduce the size of the deposit which their children have to raise in order to buy a home of their own,"
"This product is ideal for parents who have sufficient income to service a loan but no available capital. Or people who have capital which is tied-up and which they do not want to access in the short-term."
"We know that there is enormous demand for home ownership amongst people under the age of 40 who are currently renting and this product will make it easier for them to take that all-important first step on the ladder."
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