The product combines a joint borrower sole proprietor (JBSP) mortgage with a guarantor product.
This means that buyer purchases a property in their own name with a mortgage of up to 100 per cent loan to value (LTV). This will be enabled by one or more people who will either provide a deposit and be joint borrowers on the mortgage, or by using their property as security.
Those assisting with the mortgage as joint borrowers will need to provide additional security for borrowing up to 80 per cent LTV. This can be in the form of cash held in a savings account with Vernon Building Society which earns interest, or for loans up to 75 per cent LTV, helpers can take out a charge against their property.
After five years, the family helpers get their funds back with interest or have the legal charge removed from the property which has been used as security. This happens as long as the buyer can afford the mortgage independently.
The mortgage has no fee and a pay rate of 3.4 per cent, which is a 2.7 per cent lifetime discount from the mutual’s standard variable rate of 6.1 per cent. The interest rate also has a floor, meaning it will never get lower than 2.5 per cent during the discount period.
It is available for loans between £125,000 and £500,000, for terms up to 35 years.
Hurdling the affordability barrier
Brendan Crowshaw (pictured), head of mortgage and savings distribution at Vernon Building Society, said: “We’re thrilled to launch Head Start to help buyers into a home of their own with family support.
“This innovative mortgage helps borrowers to boost their buying power and get over the deposit and affordability barriers to homebuying.”
