A new building society is launching an innovative mortgage scheme. The Family Building Society has just announced its Family Mortgage aimed at young adults who might otherwise have trouble getting onto the property ladder. The idea is that it allows family members to pool their finances together in order to reduce the cost of repayments.
There are three options being offered under what is called the Family Mortgage.
The Family Security Account allows a family member to deposit savings into an account that will pay interest and thereby provide security for the mortgage. If buyers can pay a 5% deposit the savings for the mortgage are used as security and will bring the interest they otherwise might have to pay down.
The second option is an account that is aimed at families who are wealthy but do not have spare cash, allowing parents to offer a charge over their property as security to The Family Building Society. The same aforementioned 5% deposit exists for this option.
The third and final option is a Family Offset Account in which family members have the choice of depositing savings. It won’t pay interest to the family member but the buyer only pays interest on the loan minus what savings are deposited. These savings are still in the ownership of the family member and can be reclaimed after a decade.
All three of these options from The Family Building Society can be combined.
The Family Building Society’s Chief Executive, Mark Bogard, said:
Young adults even with high paying jobs are struggling to meet the cost of living, so they are either living in rented accommodation longer than ever before or are being forced to live at home. Thus they need help to get on the property ladder. Our research shows that children would rather soldier on than take money out of their parents’ retirement pot. Our Family Mortgage gets buyers on the property ladder sooner and keeps family members in control of their money. And because it’s a formal arrangement everybody knows where they stand.
The Family Building Society will review each mortgage after between three or five years of a fixed term. It will review again at ten years and take into account any changes in circumstances and the property’s value. This means that money could be released back to the families taking out a mortgage and any charge over a property might be removed.