Lloyds launches new family-backed mortgage product

The new Lloyds Bank Lend a Hand mortgage removes the need for a deposit from the first-time buyer – this is provided by the savings of a family member, who can contribute up to 10 per cent of the loan as security.

The three-year fixed mortgage at 2.99 per cent will also provide a boost for the Bank of Mum and Dad, helping parents make the most of their savings at a three-year fixed rate of 2.5 per cent.

Vim Maru, group director, retail at Lloyds Banking Group, said: “We are committed to lending £30 billion to first-time buyers by 2020 as part of our pledge to help people and communities across Britain prosper – and Lend a Hand is one of the ways we will do this.

“At the heart of this market-leading product is helping to address the biggest challenge first-time buyers face getting on to the property ladder, while rewarding loyal customers in a low rate environment.

“Although times have changed, children still have a similar ambition to their parents – to own their own home. Lend a Hand helps parents to invest in their children’s future and get the best return on their cash.”

New research from Lloyds suggests that the number one life goal for people aged 18 to 35 is to buy a house (43 per cent), but half say that saving a deposit is the biggest barrier. Meanwhile, more than two in five parents (41 per cent) would like to help financially, but worry that they’ll need the money later in life.

The research shows that after buying a home, getting married (36 per cent), and starting a family (32 per cent) are the most popular life goals for millennials. Half (50 per cent) say that lack of a deposit was the biggest obstacle to buying their first home, while a quarter (26 per cent) say they have other priorities just now and another 24 per cent say they can’t afford to buy in their desired location. 

Millennials believe they will need a £53,718 deposit to get the keys to their first home, with those in London expecting to put down £97,232. However, parents think it will only cost their children an average of £28,704 – and £37,233 in London. The actual average deposit for first-time buyers is £33,211 (and £110,182 in London). In fact, the parents’ estimate is six times higher than the average deposit that they claim to have needed for their first home (£4,600).

Although parents recognise the struggle their children face to get onto the property ladder, only one in four (25 per cent) think their child should save more. The poll reveals that 18-35 year-olds are saving on average £182.80 a month, which means it would take around 15 years to save for the average deposit at that rate, or just over half a century (52 years) to amass enough for a London pad.

The research shows that parents have average savings of £43,416 – 30 per cent more than the average deposit needed. Those polled do want to help their children, but two in five (41 per cent) are put off as they might need the money later and 39 per cent think they may need it for retirement.