Woolwich has brought some much-needed innovation to the guarantor mortgage market. Their new offering, Helpful Start™, is a “practical way for parents to help their children to get on or up the property ladder”.
The first part of the initiative is the Family Affordability Plan. This allows parents to set up a joint mortgage with their kids without having to give a lump sum away. By combining incomes for the mortgage application, mums and dads can help their children afford and pay a bigger mortgage than they could on their own.
As with guarantor mortgages in the past, parents will be jointly liable. They will be named on the mortgage with their offspring but will not be co-owners of the property.
Where Woolwich’s product differs from previous mortgages of this sort is in the expectations for the child’s income. One of the main problems with guarantor deals is that lenders want to see that the child’s income is going to grow. This is all very well if your daughter is a trainee doctor. But many young people are in less well-paid fields with no guarantee that their income is going to increase.
The Family Affordability Plan looks like it will help people in that situation. This could be a realistic solution for first time buyers who may have been priced out of borrowing up to now, even with the offer of help from their parents.
We are pleased to see some innovation in this market. If you want advice about the Woolwich products and your options for guarantor mortgages, give Limetree a call. We’ll do everything we can to help you, or your children, onto the property ladder.