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Brokers - which lenders are best for family support?

Journalist: John Fitzsimons, Freelance

ended 08. August 2023

Hello brokers

According to new research, around half of buyers had some form of support - likely from their family - in getting onto the housing ladder (https://www.mortgagesolutions.co.uk/news/2023/08/07/half-of-homeowners-need-support-to-get-onto-housing-ladder/)

So we would like to get a sense of what the market is like for these borrowers at the moment. 

Are there certain lenders who stand out for being easy to work with, or particularly generous, when family support is involved?

Counter to that, are there lenders who are a bit too stringent over the rules when loved ones are supporting a buyer?

What about product design - do lenders need to be more creative in designing more products specifically for borrowers who need help from loved ones? 

All thoughts on this one are very welcome!

 

 

4 responses from the Newspage community

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Samuel Bull0
Senior Mortgage Broker at JB Mortgages
In the pursuit of homeownership, borrowers receiving financial assistance are becoming more common. Whilst house prices have remained strong, aspiring buyers are still finding their path onto the housing ladder with the support of their loved ones, usually in the form of a 'gifted deposit'. Mortgage lenders are generally happy to accept these arrangements and allow family members to provide a gifted deposit as long as the gift is a 'true gift' (i.e. no repayment due) and as long as no charge would be made against the property. NatWest can be particularly helpful as they will allow a gift deposit from close friends as well as immediate family members. With higher interest rates and the high cost of living, we can see this trend of family assistance being ever more prevalent in the dream of home ownership.
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Rohit KohliVerified
Director at The Mortgage Stop
Most lenders will accept gifted deposits but some lenders like Gen H offer products that are tailored specifically to help first-time buyers who are getting support from their friends and family. Even Barclays offers options such as its springboard products. Lenders tailor their products to suit the market that they are aiming at so I don't think its a case of being too stringent, it's about finding the right lender to meet your circumstances. Lenders will always undertake their due diligence checks and look to see if buyers are trying things like "back door buy-to-lets" or other such ways to purchase to circumvent their criteria. Clearly, given how tough it is to get on the ladder these days, more innovative solutions would always be welcome, but there are options out there that we can work with.
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Michelle LawsonVerified
Director at Lawson Financial
There are a variety of lenders that offer such things. Many already accept gifted deposits. Joint Borrower Sole Proprietor allows the income of a relation (usually parents) to be taken into account for affordability and being named on the mortgage but not on the Deeds. There are also options where lenders take additional security via savings or a legal charge on another property as well as products designing similarly to the Help to Buy scheme with a share of the ownership. The biggest restriction with these offerings is parental earnings and age which then restricts the term for the borrower and can make it more costly monthly due to a shorter term. Innovation is needed, for instance, where different terms can be applied on the borrowing for the parent top up lending proportion of the loan.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
A lot of lenders have their special products for FTB. Nationwide has helping hand, Accord has Income Boost, Family has the family mortgage, as does Barclays and GenH has income boosters. They can help, sometimes though, you need to consider if its the right thing to do or if you should suggest waiting a bit longer.