Barclays launches 95% mortgage for the whole family

Barclays has launched a 95% mortgage to help first-time buyers get their foot on the ladder, but they must have a family member willing to stump up too in order to qualify.

The Barclays Family Springboard mortgage offers first-time buyers a three year fixed-rate deal with a 5% deposit for 4.69%. In order to be eligible for the deal a family member of the first-time buyer must open a Helpful Start savings account linked to the mortgage into which they put 10% of the purchase price.

The savings account offers an interest rate of 1.5% and the money is returned to the family member when the three-year deal runs out.

A first-time buyer purchasing a home for £160,000 would need to save a £8,000 deposit and take out a mortgage of £152,000. The family member would need to put £16,000 into a savings account for three years.

The homeowner would repay the mortgage at £861.34 a month for three years at 4.69% based on a 25 year mortgage.  

Barclays said lending to first-time buyers was at the highest point since 2008 but was still way off its peak of 2007. There were 308,400 mortgages given to first-time buyers in 2007 compared to just 175,700 in 2012. However, banks are cautiously returning to the 95% mortgage, with around 20 deals on the market.

Barclays has also cut other deals in its mortgage range as part of a January sale. The bank is offering a three year fixed-rate deal at 2.89% for those with a 30% deposit, a reduction of 1%.

The two and five year fixed deals are offered at 2.39% and 3.39% for those with a 40% and 35% deposit respectively.

The Barclays Great Escape remortgage deal has also been cut to 2.99% for a two year deal. The remortgage package is for borrowers who have been hit by an increase in their bank’s standard variable rate last year.

Andy Gray, managing director of mortgages for Barclays, said the deals were the cheapest the bank had ever offered.  

‘The new family scheme and today’s slashed rates will encourage people to think about buying or moving home, which in turn will help the economy move forward. For existing homeowners this is extra good news as they can still look to reduce their monthly outgoings by switching to cheaper rates,’ he said.

Ben Thompson, managing director of Legal & General Mortgage Club, said Barclays’ Family Springboard mortgage was ‘desperately needed’ to boost the market for those with low deposits.