Family deposit

The principle behind The Loughborough Family Deposit mortgage is simple.  With the help of parents, a step-parent or grandparents you could apply for a mortgage even if you don’t have a deposit.

The mortgage comes with a range of options that mean family members with a variety of circumstances could make it possible for you to get onto the property ladder.

The Family Deposit mortgage is available to 18+ year old UK residents throughout England and Wales who have sufficient income to afford the mortgage repayments.

We will lend up to 100% of the value of the property, subject to a maximum of £300,000 (£90,000 minimum). The actual amount you can borrow will depend on your income after the deduction of household expenses and other financial commitments.

Your family member(s) are able to support you by providing security in the form of Cash, Collateral or both.

1. Security through savings: this allows the family member(s) to use their savings to help you (the buyer) without having to ‘give’ the money to you. The family member(s) deposit cash in a specifically designed savings account with the Society. The cash deposited must be for an amount equal to 20% of the value of the property to be purchased.
2. Security through property (collateral): this allows the family member(s) to help even if they don’t have spare cash but do have equity in their home. The family member agrees to some of the equity in their residential property being used as security. They would do this by giving what is called ‘a legal charge’, for an amount of equity equal to 20% of the value of the property to be purchased, which means the Society would have specific legal rights over the family member’s residential property.
3. Or, a combination of options 1 and 2 is available.  The minimum amount of each security option is £5,000.

The security noted in the examples above can be used to make up any shortfall (loss) that arises if the property is sold.

Like any other mortgage the property is owned by the borrower.  Family members providing support have no rights to the property.

This may be possible and our mortgage advice team can discuss this option with you.  All family members providing support would need to agree how the deposit security is split between them and they would all be required to take separate independent legal advice.

Yes, there are no restrictions on the number of family members that can be helped in this way. 

You can help more than one family member with cash as security; however, it will be necessary to have a separate Assisted Purchase Deposit Guarantee Account for each cash security.

Helping more than one family member using collateral security against property would need separate mortgage collateral deeds for each deposit security being provided.  The total of all existing mortgages and all mortgage collateral deeds is strictly limited to a maximum of 75% of the family member’s residential property value.

Yes.

No.  Annual mortgage statements will only be provided to the borrower because the family member isn’t responsible for maintaining the monthly mortgage payments.  The family member will, however, be notified if mortgage payments are not made as required.

A family member who provides cash security needs to be fully aware that the cash will be called upon to make up any shortfall if the property is sold in the event of default and the proceeds are less than the mortgage debt plus costs.  Where property is provided as security the family member’s residential property may be repossessed by us to recover the debt. Liability is limited to the amount of the security.

If security is provided by more than one family member, the liability to make up any shortfall will be divided proportionately by reference to the value the respective securities bear to the total value of all additional security linked to the Family Deposit Mortgage.  For example, if the total guarantee provided was £40,000 and family member A provided £30,000 (75%) and family member B provided £10,000 (25%) and the property was repossessed and sold at a loss of £20,000 then family member A would lose £15,000 (75%) and family member B would lose £5,000 (25%).    

All family members will be required to take independent legal advice before the borrower is committed to the purchase.