Aldermore is launching a mortgage scheme for those with a 5% deposit in conjunction with Hitachi Capital.
The deal combines a two-year fixed rate mortgage at 80% LTV from Aldermore with a 15% LTV unsecured loan provided by Hitachi Capital.
The two-year fix has a rate of 5.48% and has a £999 completion fee and a maximum loan size of £250,000.
The unsecured loan has a fixed rate of 5.90% for 12 years, has a maximum size of £50,000 and permits overpayments at any time.
The scheme is initially being marketed via Barratt Homes but will be rolled out to other house builders in due course.
Charles Haresnape, managing director of residential mortgages at Aldermore, says: “The single biggest issue holding back perfectly creditworthy house buyers is their inability to raise a sufficiently large deposit.
“Aldermore’s recently launched Family Guarantee Mortgage provides an option for borrowers seeking a 100% LTV loan and this scheme gives those who can raise a 5% cash deposit yet another route to home ownership.
“We are providing would-be homeowners with choices, in a market where the options for those with less than a 25% deposit are few and far between.”
Gerald Grimes, managing director at Hitachi Capital, says: “Would-be home buyers have become disheartened with the current housing market because of the large deposits demanded by a lot of lenders.
“Last year we teamed up with Barratt Homes to offer parents the opportunity to help their children onto the ladder; this year we are opening up this innovative product to the buyers directly.
“Initially this will be with Barratt Homes but we will be rolling it out through other house builders, such as Linden Homes, part of Galliford Try plc and Keepmoat Homes.”