Lloyds TSB - First Time Buyer Mortage - Lend a Hand

Lloyds TSB today announced the start of its new mortage product - 'Lend a Hand' to first time buyers with just a 5% deposit. This has been welcomed by the market and the industry brokers in this times of uncertainity.

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In order to qualify for the loan, friends or relatives of the borrower must hold savings worth 20% of the property's value in a special account with the bank.

The Lend a Hand mortgage offers a three-year fixed rate of 4.39%, the same rate it offers people borrowing 75% of their home's value.

The savings are tied up for three and a half years, during which time they will earn a fixed rate of interest of 3.5%.

There is also a legal charge on the account, enabling the bank to use the money to make up any shortfall if the borrower defaults on the mortgage and their home is repossessed.

At the end of the term, if the loan-to-value (LTV) ratio has fallen to 90% due to mortgage repayments and rising house prices, the legal charge on the savings account will be removed and the borrower can operate their mortgage independently.

The legal charge on the savings account enabled it to use the same credit requirements for borrowers with just a 5% deposit as those who had a 25% one.