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Lend a hand initiative opened to home movers

Lend a hand initiative opened to home movers

Category: Mortgages

Updated: 07/07/2010
First Published: 07/07/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Lend a Hand initiative introduced last year by Lloyds TSB to help first time buyers has been opened to up to home movers.

With predictions of tightening credit conditions in the near future, the news should raise some cheer amongst homeowners looking to move, but do not have a large deposit that is required with many of the best deals in the mortgage market.

The scheme enables borrowers to take out a mortgage with a deposit of only 5% of the property's value, but allowing them to access an interest rate that is usually only available to buyers with a far bigger chunk of equity.

This is possible because, under the Lend a Hand product, funds are backed up by the savings of a helper, such as a parent, a grandparent, or a particularly generous friend.

A number of first time seller are likely to benefit, especially those who purchased their first homes at the height of the housing boom in 2007, as many will not have been able to build up equity in their property.

Couples looking to start a family may also benefit from Lend a Hand, helping them overcome the struggle to raise a large enough deposit to 'upsize'.

Lloyds TSB said: "The lowest rate on the market for those with a 10% deposit is 5.99%. With Lend a Hand, borrowers can get rates from 4.79% with a £895 fee, even if they have a 5% deposit.

"At the same time, their helper benefits from a competitive savings rate (currently 3.75% AER Gross), as a legal charge is taken over the savings to offset the risk."

Darren Cook, spokesperson for Moneyfacts.co.uk, commented: "At a time when first time buyers were left out in the cold, the Lend a Hand mortgage was a welcome initiative which allowed many customers to finally put that first step on the ladder.

"It is good news that homeowners who want to trade up the ladder can now benefit from this innovative product.

"Since the start of the financial crisis, strict lending criteria has been imposed by almost every lender and many homeowners who bought their property at the peak of the housing market simply have not been able to move up the ladder.

"If these customers can find a generous sponsor, Lend a Hand is a cheaper and viable option."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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