After the initial 3-year term paying 2.99% in year one, 2.79% in year two and 2.59% in year three, the rate will revert to a lifetime follow on rate of 2.49% + BBBR – equivalent to a 100 bps reduction on the existing Family Springboard follow on rate.
The lender claimed this offers customers a £636 saving over the initial 3-year term.
The family springboard mortgage allows a parent or friend to use their savings to help first-time buyers secure a mortgage by holding 10% of the purchase price in a helpful start account.
This enables the homebuyers to apply for a 95% loan-to-value mortgage. After three years the money is released back to the person whose savings were used to set against the loan, with BOE + 1.5% interest, providing that the mortgage repayments have been kept up to date.
Andrew Montlake, director at Coreco Mortgage Brokers, said: “The springboard product shows that innovation can exist in the current environment and these improvements confirm that there are lenders out there that want to lend and support the first-time buyer market.
“The appeal to family members is that they know their savings are helping their children without giving them up entirely. Having the rate “step down” over the initial three year term also gives further comfort that the mortgage will remain affordable and the savings returned, with interest, after three years."
Barclays has also launched a 5-year fixed rate at 1.99% - available for a limited time only - and introduced new rates across its 2, 5 and 10-year fixed rates range.
