Family Springboard Mortgages
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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.
In this article:
- What is a family springboard mortgage?
- How do they work?
- How to get a family springboard mortgage
- How much deposit do you need?
- Can you get a 100% springboard mortgage?
- Benefits of a family springboard mortgage
- How much can you borrow?
- Which lenders offer springboard mortgages?
- Eligibility criteria
- Find a specialist family mortgage broker
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.
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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.
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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:
- It allows a step onto a challenging property ladder in a time when saving for a substantial deposit might be difficult. This kind of loan allows for a small or no deposit, without the additional burden of applying for an expensive 95-100% mortgage, which might also be hard to qualify for.
- You also own the property outright, without having to share the deeds or get into a complicated commitment.
For your family or friend:
- They can use any savings they don’t imminently need or want to touch while helping out a loved one.
- They will gather a good rate of interest during the five years, so will have made money as long as you’re a solid beneficiary and have not defaulted.
- Some lenders will also allow them to help more than one person at once, which works in a situation when multiple offspring are buying homes around the same time, for example. Or they can take their money away after five years and put it straight into investing in someone else's mortgage, while taking the interest proceeds for themselves.
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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 4x and 4.5x your income, while others might stretch to 5x or even 6x 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.
Mortgage Affordability Calculator
Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
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.
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.
Speak to an expert in family springboard mortgages
Maximise your chance of approval with a dedicated specialist broker
Yes, it’s possible. This will depend on the whole circumstance, but you won’t be immediately discounted for previous financial indiscretions, and help from family might boost your chances of being accepted as it goes towards offsetting the risk for lenders. The kind of debt and size, your age and where you are now will be taken into consideration. Find out more about bad credit mortgages here.
No, you can’t merge these two different kinds of mortgages. One is a product from a lender that involves buying a home with the help of family to assist you, while the other is a government support scheme that involves you initially part-owning a house and part-renting it.
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