Suitable for:
Young First Time Buyers who may not have sufficient income in their own right to get a mortgage in their name (including students) and need the help of a parent or parents acting as guarantor(s).
Loan amount and loan to value
Minimum loan size is £50,000 and the maximum is £300,000.We can lend up to 95% of the purchase price or property valuation (whichever is lower).
Property
Residential mortgages are available for owner occupied residential properties. All mortgages are subject to a suitable property valuation.
For property purchases in Scotland, we can normally use the property valuation contained in the sellers' Home Report provided that it’s no more than 3 months old (please speak with your BDM for further details).
Applicants must be at least 18 years old on application and normally not more than 85 at end of mortgage term.
Minimum mortgage term is 5 years and maximum term is 40 years.
The guarantor should not be older than 65 at the time of application and no more than 75 at the end of the mortgage term. They need able to provide confirmation of a sustainable income stream into retirement (if appropriate).
Parental Support
We require a Letter of Support from parent(s) making the monthly contribution to mortgage payments. This may also include contribution to day to day living expenses where the borrower has little or no income.
The annual income of the main earner for the parent(s) giving support must be at least £40,000, and must be sufficient to cover the support plus any existing mortgage or finance commitments they have in their own name. Any existing financial commitments of both the applicant and the parent(s) will be taken into consideration when affordability is calculated
- Capital and Interest
- Interest only - available up to 75% of the property value or purchase price (whichever is lower) with a maximum loan size of £300,000. When applying, we’ll need confirmation that plans are in place in the name of the borrower to pay off the mortgage at the end of the term and we’ll ask about these plans occasionally throughout the mortgage term. Examples of these plans are normally endowment policies; stocks and shares ISAs; pension lump sums; and second/investment properties.
Check our current interest rates.
Security:
Security for any mortgage granted will be as follows:
- A Standard Security (Scotland) / First Legal Charge (England) will be taken over the property being purchased as security for the mortgage borrowing.
- Parental Guarantee from the parent(s) acting as guarantor for borrowing. Please note the guarantee could be for a limited amount or to cover the full mortgage.
- Parental Letter of Support for monthly payments – required to support any borrowing above normal affordability on the applicants own income.
It is a requirement that the guarantor takes independent legal advice to ensure they fully understand the legal obligation of providing a guarantee.
Early Repayment Charges
If overpayments of 10% or more of the loan amount are made in any 12 month rolling period during the initial period, and depending on which mortgage your customer has, the following charges will apply:
- For our 3-year mortgage, the charge will be equivalent to 3% of the outstanding balance amount in year 1 and 2 and 2% in year 3.
- For our 5-year mortgage, the charge will be:
o 5% of the outstanding balance in the 1st year
o 4% of the outstanding balance in the 2nd year
o 3% of the outstanding balance in years 3 & 4
o 2% of the outstanding balance in year 5
After the initial period, the Society will not make an early repayment charge if the mortgage is on Standard Variable Rate and is repaid. However, there will be certain redemption fees that will need to be paid (see our Details of Charges leaflet for more information).
Where Early Repayment Charges apply to any of our mortgages, we may allow overpayments (normally up to 10% of the outstanding balance in any rolling 12 month period) without penalty.
Once any period where Early Repayment Charges are applicable has ended, capital reductions can be made without limit or penalty to reduce the balance of the mortgage.
Insurances:
We’ll need evidence that buildings insurance for the property is in place before we can release funds.
Packaging requirements
Check our Packaging Requirements for full details of documents needed for mortgage applications.