Your guide to the Family Springboard Mortgage
Your guide to the Family Springboard Mortgage
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Contents Helping buyers get on or move up the property ladder
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How the Family Springboard Mortgage works
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A step by step guide for borrowers and helpers
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Why recommend this to your clients?
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Other key features of the product
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Frequently asked questions
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Submitting an application – process explained
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For more support
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Your guide to the Family Springboard Mortgage
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Helping buyers get on or move up the property ladder First Time Buyers and home movers looking to move up the property ladder are increasingly having to turn to close family, typically their parents, for assistance with a deposit. Research shows parents are keen to help but are equally concerned about their own future financial security, and whether they can afford to contribute some of their savings towards purchasing their children’s property. We listened to you and through your feedback we have created a mortgage that enables parents to help their children purchase a new home and they get their money back with interest as long as the repayments are kept up.
Unique to the Intermediary Market, the Family Springboard Mortgage provides you with a fresh opportunity to move deeper into your relationships with your clients, to better understand their holistic financial position and ambitions as well as those of their family.
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How the Family Springboard Mortgage works The Family Springboard Mortgage comes in two parts. The borrower takes out a Family Springboard Mortgage, while their helper opens a Helpful Start Account. The helper then puts 10% of the house purchase price into the Helpful Start Account.
This means we can offer the borrower a 95% mortgage; and the borrower only requires a 5% deposit. After three years, the helper gets their money back with interest as long as the repayments are kept up.
Family Springboard Mortgage explained The diagram below explains each of the five steps of the process for the borrower and the helper. OVER 3 YEARS
5%
*
£137,500 Property
Home buyer
Deposit
£6,875
FAMILY SPRINGBOARD MORTGAGE APPROVED AND HOUSE PURCHASED
10% Deposited
Helper(s)
£13,750
95%
* Mortgage continues without the Helpful Start Account
Mortgage
MORTGAGE PAYMENTS KEPT UP
£13,750
£13,750
Funds held in Helpful Start Account
Released and returned to helper(s)1
+ Interest
After three years, funds are released as long as the Family Springboard Mortgage payments are kept up to date.
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*Maximum borrowing of 95% of the value of the property The funds held in the Helpful Start Account may be at risk if any contractual monthly payments on the connected mortgage are missed.
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How the Family Springboard Mortgage works Here’s how it could work David graduated two years ago, has been working ever since and moved back in with his parents postuniversity so he could save up to buy his own place. He had his eye on a one bedroom flat, and managed to get together a 5% deposit. His mum and dad were willing to provide financial assistance to help him become independent. That’s when they discovered the Family Springboard Mortgage. After seeking Independent
Legal Advice1, they realised that if mum and dad put 10% of the purchase price in a Helpful Start Account, David would be able to put down his saved 5% as a deposit against a 95% Family Springboard Mortgage. So David will soon be able to complete on his dream flat and mum and dad can start thinking about what to do with their money when they get their 10% back, with interest as long as the repayments are kept up.
Important information The three-year term may need to be longer in the event of the borrower facing financial difficulties with their mortgage. The funds held on the Helpful Start Account may be at risk if any contractual monthly payments on the connected mortgage are missed. THE BORROWERS HOME MAY BE REPOSSESSED IF THEY DO NOT KEEP UP REPAYMENTS ON THEIR MORTGAGE. Independent Legal Advice is where a solicitor (but not the solicitor involved in the conveyancing of the mortgage) ensures that the helpers have the implications and risks associated with taking out the Helpful Start Account explained. The solicitors will also ensure that you complete paperwork from Barclays to enable the Family Springboard Mortgage to complete. Fees will apply. 1
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A step by step guide for borrowers and helpers Who does what, and when The diagram below explains the step-by-step process for both borrowers and helpers. See page 12 for more detailed information on the application process. MORTGAGE APPLICATION BORROWER Mortgage interview
Mortgage agreed
Mortgage offer
Independent Legal Advice process begins
Account opened
Mortgage completion
Helper Application form for Helpful Start Account completed
Complete Independent Legal Advice process Money is paid into Helpful Start Account Money is locked in account
The borrower and helper do not have to apply at the same time, although both applications must be received in order for the mortgage to progress.
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Why recommend this to your clients? For the purchaser
For you
• A new high LTV purchase option
• New sales opportunities with both new and existing clients
• Receive short term help with generating a deposit, rather than a hand out • A fresh alternative for getting onto or moving up the property ladder.
For their family members • The ability to use savings to help their nearest and dearest secure a 95% LTV mortgage • For Barclays customers, the Helpful Start account can be linked into an existing offset arrangement • Once the savings plus interest is freed up they can be used to fulfil other aspirations such as maybe helping another child or family member.
• Enable your clients to achieve their financial goals for themselves and their families • Help a generation of buyers move on or up the property ladder.
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Other key features of the product Full Intermediary Access
Mortgage Current Account
As with all our products the Family Springboard mortgage is fully available you, our valued intermediary partner. We don’t dual price and our advertising encourages customers to visit brokers as well as our branches to find out more information.
An added feature is a Mortgage Current Account that comes with a cheque book and a debit card. The Mortgage Current Account is linked to the mortgage and can be used just like a normal current account.
Offset The account can be included as part of an existing offset arrangement. In this case, the funds will serve two functions for the helper – reducing the interest payable on an offset mortgage and providing the guarantee for the Family Springboard Mortgage. There will be no interest payable on the account in this case but it will reduce the interest accruing on the mortgage as part of the offset arrangement.
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Frequently asked questions For borrowers Can the buyer take out more than one Family Springboard Mortgage?
What rate will they pay on the Family Springboard Mortgage?
The Family Springboard Mortgage is specifically designed to help buyers get on or up the property ladder so they can only take out one.
The Family Springboard Mortgage offers a three year fixed rate. Full rate details are available at www. woolwichintermedaries.co.uk
How long is the mortgage term?
What happens to the Family Springboard Mortgage after the three year fixed period?
The term can be anywhere up to a maximum of 25 years. Can the buyer take out a further advance with my Family Springboard Mortgage? No. The buyer can’t borrow more on top of the Family Springboard Mortgage for the period of time the Helpful Start Account is open alongside it. Can they opt for a NewBuy home with a Family Springboard Mortgage? The government’s NewBuy scheme allows people to buy a new-build home in England without the need for a large deposit. The Family Springboard Mortgage is not available on this scheme.
If all payments to the mortgage account have been maintained after three years we will close the Helpful Start Account and release the funds back to the helpers. We may however, extend the period to release the funds if payments have not been maintained on the Family Springboard Mortgage. THE BORROWERS HOME MAY BE REPOSSESSED IF THEY DO NOT KEEP UP REPAYMENTS ON THEIR MORTGAGE.
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Frequently asked questions For helpers Can they help more than one member of their family? Yes, they simply have to set up a separate Helpful Start Account for each Family Springboard Mortgage. Are they guaranteeing the Family Springboard Mortgage? No, a guarantor would guarantee 100% of the mortgage rather than helping out on the deposit, as there’re doing. So they won’t be responsible for maintaining the repayments. Are there any circumstances in which they will lose some or all of their funds? This can only happen if the property is repossessed and sold, and there is a shortfall between the sale price and the amount of the mortgage. We may however retain funds in the Helpful Start Account in the event of missed payments on the mortgage account. Do they have any rights over the property? As a helper they have no rights over the property.
Why do they need legal advice? They will need to seek Independent Legal Advice to ensure they understand their responsibilities and commitments clearly before opening a Helpful Start Account. The legal charge will be over the duration of the deposit in the Helpful Start Account. Can they use an existing offset arrangement with Helpful Start Account? Yes, the account can be included as part of an existing offset arrangement. In this case, the funds will serve two functions for the helper – reducing the interest payable on an offset mortgage and providing the security for the Family Springboard Mortgage. There will be no interest payable on the Helpful Start Account in this case, but it will reduce the interest accruing on the mortgage as part of the offset arrangement. What if they want to draw money from my Helpful Start Account in an emergency? Any funds put into your Helpful Start Account will be unavailable until the end of the three-year term, except in exceptional circumstances. THE BORROWERS HOME MAY BE REPOSSESSED IF THEY DO NOT KEEP UP REPAYMENTS ON THEIR MORTGAGE.
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Submitting an application – process explained As with any Woolwich mortgage application you will need to follow the standard submission process but there are some additional steps to be taken to open the Helpful Start account. Here is a step by step guide to help you through the process.
Application process explained for Helper(s) who are new to Barclays
Application process explained for clients whose helper(s) are existing Barclays Mortgage or Current Account Customers
2. Advise the Helper(s) that they will need to visit their local Barclays branch with their ID&V – they should call to make an appointment first ensuring they take in their fully completed Helpful Start pack
1. Access Online Booking System to book application for your clients 2. Complete your client’s MAX application but do NOT submit 3. Download our Helpful Start pack and fully complete with Helper(s) 4. Obtain a signed application form from the Helper(s) and ensure ILA details are completed 5. Submit MAX application 6. Submit all supporting documentation including the Helpful Start pack and Privacy declaration via Scan & Send.
1. Download the Helpful Start pack from the Intermediary website before booking the case
3. Access the Online Booking System to book an application – remember you have five days to submit the application 4. Complete MAX application – do NOT submit 5. O btain a signed Helpful Start pack from the Helper(s) and ensure ILA details are completed 6. Submit MAX application 7. Submit all supporting documentation including Helpful Start pack via Scan & Send.
For more information: Visit www.woolwichintermediaries.co.uk or contact your Woolwich Relationship Manager.
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Submitting an application – process explained Client ID&V for Non-Barclays account holders If either of the clients Helper(s) is not a Barclays current account or mortgage customer they must visit a Barclays branch to undergo Identification and Verification. Visit our lending criteria policy page at www.woolwichintermediaries.co.uk for a full list of acceptable documents required to be taken with the application form when visiting the branch. If the Helper(s) are existing Barclays current account or mortgage customers, they do not need to visit a branch. Upon completion of the Identification and Verification process and full completion of the Helpful Start application form, the Helper(s) should sign the application form declaration. Submit the mortgage application, including the Privacy Declaration and Helpful Start application form as supporting documentation. Not including these documents will hold up the processing of the Family Springboard application.
Helpful Start pack The Helpful Start pack is essentially four documents in one. It includes the application form and an additional mortgage Privacy declaration (both of which need to be submitted with the mortgage application). The other two documents are the Helpful Start account additional Terms and Deed of Charge document (which both need to be handed to the Helper(s) for information purposes only). In addition, in all instances please print and hand copies of the Rates For Savers and Retail Credit Agreement documents to the Helper(s). Both are available from www.woolwichintermediaries.co.uk
