The mutual said the addition to its family-assist range means family members would need to allow a temporary charge to be placed on their own homes as security in lieu of a deposit.
It said the product would appeal to parents or grandparents who are asset-rich and wanted to help their offspring onto the housing ladder but cannot afford to give them a cash deposit or simply prefer to hold onto their savings.
The 100 per cent LTV product is on a three-year variable rate of 2.75 per cent, a discount of 2.49 per cent off Beverley’s standard variable rate (SVR).
It includes a product fee of £800 plus the cost of an independent valuation of the property being purchased and, in some cases, the parental property offered as collateral.
The charge involves 20 per cent of the purchase price being placed against the parental home, which is subject to a maximum LTV ratio of 50 per cent, inclusive of any existing mortgage.
The security will remain in place for eight years, and removed subject to an independent valuation confirming the purchased property value has risen enough to at least replace the deposit. However, security can be released earlier if the deposit amount is repaid by the borrower in full.
The family member offering their home as security must also seek independent legal advice.
Simon Glass (pictured), head of new business lending at Beverley Building Society, said the lender had been prompted to add the product to its flexible range of family-assist options following Nationwide’s House Price Index, which showed a 14.3 per cent annual rise in the average house price to the end of March.
Harder than ever for FTBs
He added that this followed February’s figures which placed the average house value in the UK at a record £260,230 – an increase of £29,000 over 12 months.
Although annual growth slowed to 11.2 per cent in May – though still representing a 0.9 per cent month-on-month increase taking seasonal factors into account – the cumulative impact has made homeownership harder to achieve.
Glass added: “The situation with rising house prices is making it perhaps more challenging than ever for first-time buyers to get a footing on the housing ladder and, as a result, we’ve seen increasing interest in our family-assist mortgages generally.
“However, there was an obvious gap to try to cater for those families who are keen to help but aren’t savings-rich, though they have built up significant equity in their own homes over the years. We saw a golden opportunity to help them use that to support their loved ones in achieving homeownership, without actually having to part with any of their own hard-earned savings.”
