Family Springboard Mortgages

If you’re looking to get on the property ladder and you have a family member who is keen to help in some way without handing their money over permanently, a family springboard might be the win-win mortgage for both of you.

Here we look in greater detail at what these kinds of mortgages involve, who qualifies, why they might be right for you and what you need to do to get one.

What is a family springboard mortgage?

This aptly-named product allows a family member to ‘springboard’ you onto the property ladder; a little assistance to get you up to where you’re aiming to be. It works for some people because it’s not a permanent agreement, it doesn’t involve your loved one parting with any funds long term, it gives you and the bank security, and opens the door to better deals.

How do they work?

A family member is allowed to put some of their savings down as collateral for your mortgage, without actually giving you the money. The funds go into a savings account with the lender for five years, and you borrow as normal, making your repayments over this time.

At the end of this period, the funds are released back to your family member plus interest, as long as you have not defaulted during this time. You will have paid enough of the loan balance then to take over the mortgage without extra security.

What it allows for is a better mortgage deal from the bank, because in effect the lender sees your mortgage as having a lower loan-to-value ratio, therefore less risky.

Who can help you?

This varies from lender to lender. For example, Barclays allows family and friends to qualify as your benefactor, while others may stipulate it needs to be a close relative. A good mortgage broker, like the ones we work with, can talk you through your options here and find participating lenders who might be willing to provide flexible options.

What happens if I miss mortgage repayments within the five years?

The secure funds put in by your family member acts as a backup in this eventuality, so you should be fully informed on what happens in this scenario. Your broker will take you through the small print according to each lender, but it’s likely the money will be held until your payments are up to date, or it could be held for a particular time frame.

How to get a family springboard mortgage

If you think this might be the right mortgage for you, follow these simple steps towards getting one:

1. Speak to your support: Have a clear, considered and open conversation with your loved one about whether they’re willing to help you, what they’re happy to stretch to as a lump sum, and expectations all around. This is a commitment that involves trust and integrity, as well as simply a financial agreement, so it should not be entered into lightly.

2. Find the right broker: Getting matched to a specialist advisor with experience of working with family mortgages is crucial to the overall success of your application. From the start, they can work with both you and your benefactor to ensure you find the right lenders and products that best suit your circumstances, providing support and expertise throughout.

3. Application process: Now that firm support is in place and your broker has identified the ideal lender, the next step is to provide all the necessary evidence and fill in all required documentation involved. This might be more complex than with a standard mortgage, but your broker will still be around to assist with this.

How much deposit do you need?

This is for borrowers who have a 5% deposit to put down, and therefore need to get a 95% mortgage in order to buy their home. Your backer then makes a 10% contribution that’s locked into an account for five years. This gives the lender the guarantee of a 15% reserve instead of 5%, should they need it.

Can you get a 100% springboard mortgage?

Yes this is something that is offered by some lenders, who will give you a loan deal based on a 90% mortgage instead of an 85% one – albeit this is quite rare. While it’s always better to try and bring down that borrowing with a deposit, this does mean it might be an option if you simply don’t have it.

Benefits of a family springboard mortgage

There are perks for both the borrower and the family advocate with this particular mortgage product. For the home buyer:

For your family or friend:

How much can you borrow?

This will come down to the individual policies of each lender, but the parameters are usually set between £5,000 and £500,000. However, your own affordability and financial situation will be the decider for lenders on how much they’re willing to offer you.

Most lenders will offer between 4 and 4.5 times your anual income, while others might stretch to 5 times or even 6 times for some borrowers. To get an initial idea of what you might be able to get, try our affordability calculator to help you do your sums.

Which lenders offer springboard mortgages?

There are a number of lenders who provide mortgages backed by relatives or close friends. Some might come with a different name, however, so look out for products that are also called family assist mortgages (The Tipton), step up mortgages (Santander), family boost mortgages (Halifax), family deposit mortgages (Nationwide) or lend a hand mortgages (Lloyds).

A family springboard mortgage is the name given to this specific product by Barclays, and while many of them work similarly, there are subtle differences between each one.

Eligibility criteria

Lenders will assess you on the usual criteria they use for would-be borrowers. For example, how old are you? What is your income? What is your credit history like? And how well do you manage your outgoings?

Some springboard mortgage providers will lend to both first time buyers and home movers alike, while others will insist this is only available to those wanting to get a foot on the ladder for the first time.

Find a specialist family mortgage broker

Looking for a very specific mortgage when you’re in a unique circumstance can be overwhelming and complicated. Searching for a niche product needs expert know-how, and this is where your experienced and reliable broker comes in to find the right deal and offer practical solutions.

To find that peace of mind and safe pair of hands, we can match you to the right broker for your situation. Our highly trained five star-rated experts offer tailored advice and support, and are dedicated to securing the best outcome for you. Contact us today on 0808 189 2301 for a free initial consultation or make an online enquiry.