New first time buyer mortgage from Lloyds TSB

Lloyds TSB has launched a new first time buyer mortgage called ‘Lend a Hand’ with up to 95% loan to value (LTV).

The new product is for first time buyers and is a fixed rate mortgage at 4.39% for 3 years.

The difference with this account that supports the comparatively low interest rate is that Lloyds TSB will take a legal charge on a savings account belonging to the first time buyers parents.

Lloyds are still looking for a 25% deposit but they are allowing this to be made up through a combination of a minimum 5% deposit by the first time buyers and the remainder from the parents savings account.

Commercial Director of mortgages at Lloyds Banking Group, Stephen Noakes, said ‘First time buyers are essential to returning the housing market back to good health because every first time buyer helps, on average, four other households move.’

He added ‘Market conditions mean virtually no 95% loan to value mortgages are available at the moment, while the few that are come at a high price with stringent credit requirements. The legal charge of the parents’ savings account means we can offset the risk of lending at this level to offer a realistic and affordable option for first time buyers.’

According to the Council of Mortgage Lenders (CML) nearly 40% of homeowners under 30 had financial help from their parents for their house deposit.

At the end of the 3 year fixed period, if through mortgage payments and house price rises, the LTV on the property has dropped to 90% then Lloyds will remove the legal charge on the savings account and pass the mortgage to the first time buyer to manage independently.

At this time the mortgage can be switched to the Lloyds standard variable rate or a new mortgage or remortgage product.