If you can afford mortgage repayments but you don’t have a deposit, a Family Springboard Mortgage may be the key to unlocking the door to your dream home. By sharing some of the risk involved with a close family member or friend, known as your helper, you may become eligible for a mortgage that would otherwise be out of reach. Unlike some similar products, providing you keep up with your repayments, your helper can also benefit by generating interest on their savings. It almost sounds too good to be true, but like most things in life, there are risks to be aware of. In this guide, we’ll explain everything you need to know about Family Springboard Mortgages, including what they are, how much you could borrow, the benefits and drawbacks of these products, and what other options may be more suitable.
What is a Family Springboard Mortgage?
A Family Springboard Mortgage is a mortgage product offered in the UK that allows a family member or friend to help you get on the property ladder by acting as a helper. Being a helper is similar to being a guarantor – your helper will share some of the risk of the loan without giving you money directly. If a lack of deposit is making it difficult to get a mortgage on your own, a Family Springboard Mortgage could give you the support you need to make homeownership a reality.
How Do Family Springboard Mortgages Work?
With a Family Springboard Mortgage, you as the borrower don’t need to put down a deposit. Instead, your helper will need to invest some of their savings equal to 10% of the property value into a linked savings account with the lender, which will act as security for your mortgage.
Your helper’s money will be locked in the account for a fixed term of five years, but it will accrue interest during that time. As long as you keep up with the repayments, your helper will receive their money back plus the interest at the end of the five-year period. If you fail to keep up with repayments, however, the lender may have to use some or all of your helper’s deposit to cover what you owe.
Who Can Get a Family Springboard Mortgage?
Family Springboard Mortgages and similar products are typically used by First Time Buyers, but most lenders will consider any buyer who might face difficulties qualifying for a regular mortgage on their own. A typical applicant won’t have a deposit saved but will be in a position to cover monthly mortgage repayments.
How Much Can I Borrow With a Family Springboard Mortgage?
In terms of loan-to-value (LTV), you may be able to borrow up to 100% of the property’s value with a Family Springboard Mortgage. With other similar products this will typically be around 90% to 95% LTV.
Having said that, the exact amount you’ll be able to borrow will depend on your financial situation. This could be between 4.5 to 5.5 times your income but may be capped at £500,000 woth this particular product. You may be able to borrow more with other similar products.
To find out exactly how much you could borrow with a Family Springboard Mortgage or similar product, please book a chat with one of our friendly mortgage advisors.
What are the Benefits and Drawbacks of a Family Springboard Mortgage?
A Family Springboard Mortgage can be life-changing for the borrower, allowing you to get a mortgage that you may not qualify for otherwise. They can also be more manageable for the helper, allowing a loved one to help you without having to gift money directly or use their property as security. That being said, there are implications to be aware of for you and your helper if things don’t go as smoothly as planned. We’ve outlined the benefits, drawbacks and risks below, but please be sure to speak to a mortgage broker who can explain these to you in more detail.
Benefits of a Family Springboard Mortgage
- Allows you to buy a property sooner than you would be able to otherwise without needing a deposit.
- Allows you to potentially access better mortgage rates due to the additional security provided by your helper.
- As long as you keep up with your repayments, you may be able to improve your credit score.
- Unlike a cash gift, your helper will earn interest on their savings (providing you keep up with the repayments).
Drawbacks & Risks of a Family Springboard Mortgage
- You’ll need to find someone with the required savings who’s willing to take on the risk of being your helper.
- Your helper’s money is tied up for five years, potentially reducing their financial flexibility.
- Your helper may lose some or all of the money they invested if you’re unable to keep up with the repayments. Their credit score may also be affected.
- If the worst were to happen, family relationships may be damaged due to the financial strain inflicted on your helper.
What Other Options Are There to Help Me Get a Mortgage?
If you think you might struggle to get a regular mortgage, there are plenty of other options that may be available to you. The best thing to do is speak to a mortgage broker to see which is most suitable, but please read on below to get a feel for the current products and schemes on offer.
Similar Products from Other Lenders
As mentioned, many lenders offer similar products to the Family Springboard Mortgage – examples being a Family Assist Mortgage, Step Up Mortgage, Family Boost Mortgage, Family Deposit Mortgage and Lend a Hand Mortgage. To find out which product offers you the most favourable terms, book a chat with one of our expert mortgage brokers today.
Property as Security Guarantor Mortgages
This is another type of guarantor mortgage where your family or friends can share some of the risk, allowing you to qualify for a mortgage you may not be eligible for on your own. The main difference here is that your guarantor’s property will be used as collateral instead of their savings. This means that if you, the borrower, were to default on your mortgage and your guarantor is also unable to make the repayments, the lender could repossess the guarantor’s property to recover the debt. To find out more about guarantor mortgages in general, please read our guide, ‘Can a Guarantor Help Me Get a Mortgage and How Does it Work’
Family Offset Mortgage
Another related option is a Family Offset Mortgage. Similar to the Family Springboard Mortgage, a close family member will need to open a savings account that is linked to your mortgage. However, rather than being used as security, the funds in this account are used to offset your mortgage interest, thereby reducing your monthly repayments. These work in a similar way to regular offset mortgages, so to learn more about these products please read our guide, ‘Offset Mortgages – Could You Save Money on Your Mortgage?’
Track Record Mortgage
There is currently a product available that allows renters who have kept up with their rental payments for 12 months to get a mortgage without a deposit. You’ll still need to pass the lender’s affordability and credit checks, and the amount you can borrow will be calculated based on the amount of rent you’ve been paying. To learn more about Track Record Mortgages, please read our guide, ‘Can I Get a No Deposit Mortgage – 100% Mortgages Explained’.
Help to Buy Schemes
There are various Help to Buy Schemes available that may be better suited if you don’t have a family member who is willing or able to act as a guarantor. You can learn more about the Help to Buy Schemes currently on offer here, or by visiting one of the links below.
- The 95% Mortgage Guarantee Scheme allows mortgage lenders to offer 95% loan-to-value mortgages for properties that are not new builds, so you can purchase a home with only a 5% to 9% deposit. To learn more about this scheme, please read our guide, ‘95% Mortgage Guarantee Scheme Explained’.
- The Deposit Unlock Scheme also offers 95% loan-to-value mortgages but for new build properties only, so you can purchase a home with only a 5% to 9% deposit. To learn more about this scheme, please read our guide, ‘Deposit Unlock Scheme Explained’.
- The Shared Ownership Scheme allows you to buy a share of a home and rent the remaining share. To learn more about this scheme, please read our guide, ‘Shared Ownership Scheme Explained’.
Who Can Be a Helper for a Family Springboard Mortgage?
Typically, helpers will be close family members like parents or grandparents, however, you can also choose a sibling, aunt, uncle, or even a close friend. Essentially, anyone who has the capital to invest and is willing to take on the risks involved can be your helper. For other similar products with different lenders, you may be more limited as some will only accept close family members. No matter who you choose as your helper, it’s important he or she fully understands the implications before committing their money.
Is a Family Springboard Mortgage Right for Me?
A Family Springboard Mortgage may be the right choice for you if you are struggling to save a deposit but you are still in a position to cover mortgage repayments on a monthly basis. You’ll also need to have someone who is willing and able to act as your helper, if you don’t, then one of the other options mentioned earlier may be more suitable.
How Do I Get a Family Springboard Mortgage?
It’s highly recommended you speak to an experienced mortgage advisor instead of approaching a lender directly. One reason for this is that there are plenty of products and schemes available to help you get on the property ladder. Your advisor will be able to figure out which one is most suitable for your situation and needs, and then he or she will guide you through the process and handle the application on your behalf. Your mortgage advisor will also be able to recommend products you’re likely to be accepted for, which is important because being rejected can damage your credit score. To get going, please book a chat with one of our friendly mortgage advisors today.
The Bottom Line
A Family Springboard Mortgage can offer a lifeline to people who can afford a mortgage on a monthly basis but don’t have a deposit to put down. You as the borrower will need to find a family member or friend who is willing to transfer 10% of the property’s price into an account with the lender. Your helper must be aware that their money will be locked away for five years and could be used to cover your repayments if you’re unable to make them during the term. However, providing you keep up with your repayments, your helper will receive their money back in full along with accrued interest – making this potentially more favourable for them compared to gifting you the money directly. Due to the risks involved, it’s important you and your helper fully understand how these products work before committing. It’s also advisable to explore other similar products and schemes to see which is most suitable for your situation. Our expert mortgage advisors can help you choose the right product, ensure you fully understand the implications, and apply on your behalf to make the process easy for you. Simply book a chat to get going.
At Michael Usher Mortgage Services, we’ve been helping our local community for over 30 years! We’re not affiliated with any particular lender, so we can access a comprehensive range of mortgages from across the market to find a deal that suits your needs. We’ll guide you through the process and liaise with your lender, estate agent and solicitor to ensure your application goes as smoothly as possible, and we can also help to protect your mortgage with our FREE Insurance Service.
Talk to one of our friendly mortgage advisors for free to get going quickly. Our head office is on Frimley High Street, but we can also help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The precise amount will depend on your circumstances but will be agreed with you before proceeding.
