Brokers respond positively to FTB scheme from Barratt and Hitachi
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Brokers have welcomed a new scheme between Hitachi Capital (UK) and Barratt Developments, which offers an unsecured loan to the parents of first-time buyers.
Hitachi Capital (UK) is offering parents and legal guardians of first-time buyers unsecured loans of up to £50,000 to use as a deposit for an 80% LTV mortgage.
Buyers will need to raise a 5% deposit and the remaining 15% of the purchase price can be met through the unsecured loan.
The loans are for 12 years at a fixed rate of 5.4%. There are no early repayment charges and un-limited overpayments are allowed at any time without penalty.
They are available for Barratt Developments brands - Barratt Homes, David Wilson Homes and Ward Homes.
Applicants must be UK residents, home owners and have a good credit history.
Melanie Bien, director at Private Finance, says: “We need innovation in the mortgage market and this offers a solution for one developer.”
Bien says lenders should not have any problem accepting the loan as a deposit because it is coming from the borrowers’ parents.
She says: “As long as the app-licant discloses how the deposit has been raised, it should not be an issue.
“It should work in the applicant’s favour that it has come from their parents and it is not them who are getting into debt.”
Aaron Strutt, communications manager at Trinity Financial Group, says: “It’s a good deal and the 5.4% rate is good for an un-secured loan.
“It is a positive step that Barratt is thinking of other ways to get people to buy its homes, but borro-wers would need to have generous parents to take out £50,000 of debt at a time when so many are repaying money they owe.”
But he adds: “I’m sure it will help some people onto the property ladder though.”
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