Lloyds Offers 100 per cent Loan to Value Mortgage Option

Lloyds Bank have revealed their new 100% mortgage deal.  The new “lend a hand mortgage”.

The new Lloyds Bank mortgage has been introduced to help parents invest in their children’s future.  Parents or another family member must put up 10% as their deposit and the cash is placed into savings account, one of the named accounts is the Club Lloyds account with gives you £500 cashback too.

The mortgage is then 100% loan to value (LTV) and fixed for 3 years at 2.99% with maximum term of 30 years, the deposit is returned to the person that paid it after 3 years if repayments are up to date.

Barclays offer a similar product fixed for 3 years at 2% and currently a lower savings rate of 2.25% their maximum term is 25 years as do a few more mortgage lenders.

Comment:

It is good to see lenders starting to be more adaptable and develop products that meet today’s needs and allow struggling first time buyers onto the property ladder.  That said, the 100% LTV is a dangerous game and toxic debt that caused the last credit crunch crisis could re-emerge.  We still believe that if a first time buyer cannot even save at least some towards their deposit then are they responsible enough to manage a mortgage anyway?  In addition, if a parent has 10% and won’t ‘lend’ it to their child, why should a bank that had to be bailed out then lend the money?  We like the concept but still feel more commitment is needed from the first time buyer, even them paying a little more than the mortgage into an offset savings account as a means of ‘paying the parents back’ or indeed building up their own equity and security for their parents.