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Parents offered loans to help FTB children

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  • 13/01/2011
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Parents offered loans to help FTB children
Hitachi Capital has partnered up with house builder Barratt to offer parents of first-time buyers the ability to help them with a deposit using an unsecured personal loan of up to £50,000.

The Hitachi Capital scheme means that a typical first-time buyer who can raise an 80% LTV mortgage will only need to have a 5% deposit. The remaining 15% is met by the parent’s or legal guardian’s unsecured loan.

The unsecured loan is available up to £50,000 over 12 years at a fixed rate of 5.4%. The loan has no early repayment charges and allows unlimited overpayments at any time during the term without penalty.

People will be eligible when their children buy a home under one of the three Barratt Developments brands – Barratt Homes, David Wilson Homes and Ward Homes.

Applicants must be UK residents, homeowners, have either earned or retirement income and have a good credit history.

Hitachi Capital, the financial services arm of the Japanese conglomerate, and Barratt said that the partnership is designed to help address the restricted availability of mortgages to first-time buyers.

Mark Clare, chief executive of Barratt Developments, said: “This gives parents a low-risk way to reduce the size of the deposit which their children have to raise in order to buy a home of their own.

“This product is ideal for parents who have sufficient income to service a loan, but no available capital, or people who have capital which is tied-up and which they do not want to access in the short term.”

Gerald Grimes, managing director of Hitachi Capital (UK), said: “Ten years ago first-time buyers had to raise around £10,000 for a deposit. Today that figure is closer to £30,000 and in some parts of the country £50,000, and therefore it is no great surprise that this vital aspect of the housing market is currently so weak.

“This innovative Barratt loan gives parents an affordable option to support families getting on the housing ladder without dipping into hard earned savings.”

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