The Lloyds Lend a Hand mortgage is now available to home movers to help those who have not got enough equity in their home for a significant deposit.
Originally launched to help first time buyers get a foot on the property ladder without having to save up a hefty deposit, first time sellers can now benefit from Lloyds' Lend a Hand mortgage.
Lloyds says it has made it available to first time sellers who bought near the peak of the property boom because if they want to move up the ladder they are facing a similar issue to first time buyers – a lack of equity towards the new property.
Lloyds' Lend a Hand mortgage allows first time buyers and home movers to borrow up to 95 per cent of the property value, under the conditions that 25 per cent of the purchase price is provided by the buyer and their parents or family member, with the buyer contributing a minimum of five per cent of this amount.
Unlike the controversial 95 per cent mortgages that were widely available before the housing crash, this equates to the lender advancing only 75 per cent of the value of the property by taking legal charge over the parental contribution.
This results in less risk for the lender and consequently a lower interest rate for the borrower.
Andrew Hagger of Moneynet.co.uk has said that the move from Lloyds mortgages is "innovative," and that it could "help keep the housing market moving."
"It's not only first time buyers who have found lenders' 15% plus deposit requirements a major barrier to home ownership," he said.
Lloyds current account customers can borrow at a preferential rate of 4.79 per cent with a fee of £495, while others will pay 4.99 per cent, and the parents earn a competitive rate of interest on the savings they contribute, until they are released from their obligation when the homeowner accrues 10 per cent equity in the property.
Mr Hagger says that while switching current accounts can be seen as inconvenient, the 0.2 per cent saving can save £576 in payments over three years, making it worth the hassle.
"This sort of product innovation will provide a new and workable solution for some borrowers and their families and as a result may help the current subdued property market to keep ticking over," he said.
© Fair Investment Company Ltd
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