Choosing the right mortgage for you can feel daunting. With so many lenders offering different interest rates and loan terms, making a final decision can be challenging. However, aside from simply offering rates and terms, some lenders provide innovative and unique mortgage products which provide flexibility, support or discounts which may help your circumstances and make the decision easier.
In this article, we consider six of these innovative offerings, looking at the pros and cons for each to aid you in developing a complete understanding of the products on offer.
1. Barclays Family Springboard
For many, the key barrier to the property market is finding the money for a deposit. Fortunately, Barclays offer a creative solution to this issue with their Family Springboard Mortgage.
Rather than requiring a traditional deposit, the Family Springboard allows a family member (most often a parent) to place 10% of the property’s purchase value into a linked savings account (Helpful Start account), where it remains untouched for five years.
Providing the mortgage payments are maintained for these 5 years, the contributing family member receives their initial payment back with interest.
Why does this stand out?
- No deposit is required from the buyer.
- The family member’s money is eventually returned provided repayments are made on time.
- Encourages intergenerational support without the need to gift money.
What are the considerations?
- The family member’s money is tied up for 5 years and cannot be accessed during this time.
- If the borrower misses mortgage repayments, the family member’s deposit may be at risk.
- This offering is only available on specific fixed-rate products, which may be less competitive than others on the market.
Who may this be for?
This mortgage offering is ideal for those struggling to build a deposit for a home and have supportive family member who wish to help but are unable to permanently part with their savings.
2. Nationwide’s Overpay and Underpay Feature
While not a specific offering, Nationwide offer a flexible mortgage feature which allows borrowers to make underpayments on their mortgage providing overpayments have been made in the past to increase the amount of credit built up.
Borrowers are able to make larger repayments than required when finances permit it and can underpay or take a payment break later on should finances require it.
Why does this stand out?
- This feature encourages financial discipline with a built-in reward.
- Offers cashflow flexibility for borrowers with income variability.
- Avoids the need to remortgage to adjust monthly payment amounts.
What are the considerations?
- The underpayment feature requires previous overpayments, so may not be useful unless you are able to build credit first.
- Making overpayments above the annual allowance (usually 10% per year) on a fixed-rate mortgage may incur early repayment charges.
- Interest will still be added to your mortgage throughout the underpayment period.
- Future monthly payment amounts are recalculated at the end of the underpayment period and may change as a result.
Who may this be for?
This feature will likely be particularly useful for those whose earnings change seasonally, who regularly receives bonuses, or who are expecting a considerable lifestyle change in the near future.
3. Skipton Building Society’s Track Record Mortgage
Skipton offer a highly unique offering with its Track Record Mortgage, aimed at long-term renters who have consistently maintained their rental payments but who are unable to save for a deposit.
This innovative solution allows first-time buyers to borrow up to 100% of the value of the property, provided that they have a 12-month track record of consistent rent payments within the past 18 months, and can meet other affordability criteria. Skipton may also require proof of the regular payment of household bills.
Why does this stand out?
- No deposit is required for this offering.
- Ideal for those with rental payments as much as, or higher than, repayments on this mortgage.
- Recognises rental history as proof of affordability.
- No deposit required to apply.
What are the considerations?
- Limited to first-time buyers aged 21 or over with 12 months of rental history and no missed payments.
- Interest rates may be higher than standard products as the lender is absorbing more of the risk.
- Buyers will have no initial equity in their home and so could be at risk of negative equity should the housing market fall.
- This scheme is only available on 5-year fixed-rate mortgages.
Who is this for?
The Track Record mortgage is best suited to those with a strong history of making rental payments, but who are unable to effectively save towards a deposit.
4. Metro Joint Borrower Single Proprietor (JBSP)
Metro offer a Joint Borrower Single Proprietor (JBSP) Mortgage, which allows for up to four people to be on the mortgage while only one person is named on the property deeds.
This offering is typically used by parents looking to help their child onto the property ladder by boosting their affordability, with the supporting party’s income being taken into consideration during affordability assessment.
Why does this stand out?
- Up to four incomes are considered for affordability.
- Allows support to be given without resulting in joint ownership of the property.
What are the considerations?
- All parties involved are named on the mortgage, and therefore jointly liable for missed repayments, regardless of ownership status.
- Supporting borrowers’ own borrowing may be affected.
- Restrictions to the age of the oldest borrower may apply.
Who is this for?
This offering is great for those who need support in order to meet affordability criteria. This is commonly parents looking to help their children without taking legal ownership of the property.
Nationwide Helping Hand Mortgage
Nationwide’s Helping Hand Mortgage is designed to assist first-time buyers by allowing them to borrow more than affordability rules would typically permit. Through the scheme, Nationwide increases the maximum loan amount based on enhanced affordability calculations, particularly for application with lower outgoings and strong credit history.
Why does this stand out?
- You can borrow up to 5.5x your income (typically 4.5x).
- Available on selected 5- and 10-year fixed-rate deals.
- No additional risk-based pricing just enhanced borrowing power.
What are the potential considerations?
- Only available for first-time buyers.
- Only available for products over five years.
- Higher borrowing may result in larger monthly payments, which require careful budgeting.
Who is this ideal for?
Nationwide’s Helping Hand Mortgage is ideal for first-time buyers with a limited deposit but a strong income and low debt amounts. It is especially helpful for those looking to maximise their borrowing capacity to access higher-value properties which would otherwise be outside their reach.
6. Accord £5k Deposit Mortgage
Accord Mortgages offer a product whereby eligible borrowers can get a mortgage with a deposit of just £5,000, regardless of the value of the property (limited at £495,000). Aimed at helping first-time buyer access the property market with a smaller-than-usual amount of savings, lowering the barriers of entry.
Why does this stand out?
- Requires a fixed, relatively low, deposit amount rather than a percentage of property value.
- Supports homeownership to lower incomes or lower savings buyers.
What are the considerations?
- This offer is limited to first-time buyers only.
- Small deposit means Loan-to-Value (LTV) is high, which typically results in higher interest rates.
- Only available on existing properties. New builds are not eligible.
- The product is exclusively available at a 5-Year fixed rate.
Who is this for?
This product may be a strong option for first-time buyers with stable incomes but limited savings, and those feeling caught in a position of being able to afford monthly repayments but are not able to save for a deposit.
How Can Cooper Associates Mortgages Help You?
At Cooper Associates Mortgages, we understand that every client’s situation is unique, and so is the right mortgage. Whether you’re a first-time buyer with limited savings, a parent looking to support your child onto the property ladder, or someone seeking greater flexibility in repayments, our expert advisers are here to help.
Our role is to match you with the most suitable mortgage for your circumstances — saving you time, money and stress along the way.
Get in touch today to explore your mortgage options and discover how our team can help you take the next step with confidence.
