The new Lloyds Bank Lend a Hand mortgage removes the need for a deposit from the first-time buyer – this is provided by the savings of a family member, who can contribute up to 10% of the loan as security.
The three-year fixed mortgage at 2.99% will also provide a boost for the Bank of Mum and Dad, helping parents make the most of their savings at a three-year fixed rate of 2.5%.
Vim Maru, group director, retail at Lloyds Banking Group, said: “We are committed to lending £30 billion to first-time buyers by 2020 as part of our pledge to help people and communities across Britain prosper – and Lend a Hand is one of the ways we will do this.
“At the heart of this market-leading product is helping to address the biggest challenge first-time buyers face getting on to the property ladder, while rewarding loyal customers in a low rate environment.
“Although times have changed, children still have a similar ambition to their parents – to own their own home. Lend a Hand helps parents to invest in their children’s future and get the best return on their cash.”
Alastair Douglas, CEO of TotallyMoney, added: “Rising house prices have made it extremely difficult for people to save the deposit necessary to get on the property ladder, so it’s refreshing to see this sort of innovation from a major high-street bank.
“It’s a win-win situation for those involved. The borrower gets a genuine opportunity to buy their first home, while parents can make a decent return on the 10% deposit they stump up.
“With 50% of millennials saying saving a deposit is the biggest obstacle to buying a first home, a product like this could offer a sensible and working solution.”