Saffron Building Society has launched a new first-time buyer mortgage product.
The offering allows for a family member to put down 5 per cent of the purchase price of the property alongside 5 per cent provided by the borrower.
The former deposit is held in a savings account for the five-year length of the mortgage product term and returned at the end with an interest rate of 0.75 per cent.
The product, which is for purchase only, is fixed at 2.97 per cent, and has no arrangement fees and a maximum loan value of £500,000.
In addition, the deposit can be gifted, and the product has an ERC of 3 per cent throughout the entire five-year term.
This launch follows a similar move by Lloyds, which issued a product at the start of the year which requires a family member to put down 10 per cent of the purchase price of the property. The savings account interest rate is set at 2.5 per cent and is held as security for three years.
Saffron Building Society head of mortgage sales Anita Arch comments: “Our members told us that they would like a way of supporting their families financially in the early years of home ownership but, when they found their feet, to have the money they provided returned.
“These funds might be needed as part of retirement planning for example.
“A gifted deposit is often seen as an ideal way to assist, but gifted money is not repayable which means it is not always the ideal solution.”