Mortgages Tips

Deposit-free mortgages: first-time buyers can use parents to get 100pc home loan


Struggling first-time buyers can purchase a property without putting a penny down, but only if their parents are willing to help them get onto the ladder.

A new mortgage has been launched by Halifax which does not require applicants to have a deposit of their own. Instead, parents are asked to save the equivalent of a 10pc deposit in cash with the bank.

Parents will earn 2.5pc interest annually on their savings and will be able to withdraw the funds after three years. By saving in this linked account, their children will be eligible for a Halifax Family Boost mortgage.

The loan is three-year fixed-rate deal at 2.9pc and comes with cashback and no fees. But most crucially, it allows applicants to purchase a house with no deposit of their own. 

Either the parent or child must be a Halifax current account holder.

Halifax follows other lenders, such as Barclays and Lloyds Bank, in offering 100pc mortgages loans to customers who have parental support. 

Such deals offer a much-needed option to young house hunters who are unable to save large sums for a mortgage deposit.

Figures from Halifax show that the average first-time buyer deposit has risen by 52% in the last decade, growing from £27,059 to £41,099.

The need to save more for a deposit has pushed the average age of a first-time buyer up from 30 to 31 since 2009. In London, the average age is now 33, but areas like Hounslow and Richmond upon Thames recorded an even higher figure, with the average first-timer aged 36 in these boroughs.

Mark Harris of SPF Private Clients, a mortgage broker, said that while house prices were now falling in many areas, young buyers still found it difficult to raise a deposit.

“Growing demand from parents to help children onto the housing ladder, while still keeping control of their savings, is resulting in the growth in popularity and availability of these mortgages,” he said.

“However, there are conditions that anyone looking into these products should be aware of. Some lenders will only allow first-time buyers to access these schemes, while others require the assistor to be mortgage free.” 


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