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No Deposit Mortgage?

Lloyds have launched their 100% Mortgage for First Time Buyers(FTB), some of you may be wondering what does this actually means and how does it affect you?

Well In simple terms, if you don’t own a property and you’ll like to buy one, Lloyds will allow you to purchase your property without paying a deposit, assuming you meet the other criteria.

Now at this point, you may be thinking this sounds too good to be true? Well… it’s not. This mortgage is available to all FTB however there is a catch. Although technically you don’t need to pay the deposit, you’ll only be able to qualify if you’ve got a family member with a Lloyds savings account, they’ll also need to have the deposit amount in that account.

The money will then be locked away for three years, as assurance if anything goes wrong within that time, for example, you may default on your mortgage within the first three years. Once the three years are up the money is available again, so how useful is this to the general public?

For most people, unfortunately it may not be of much use. Simply because FTB are struggling to save the deposit, so even though they don’t put the deposit towards the property, the fact they still need to save the deposit doesn’t actually speed up the process whatsoever. Secondly, you also need to have a family member who is willing to help you by locking away a large sum of money over the three years.

Like everything, it’s good to look at the pros and cons and see if it really works for you.

Pro

  1. No deposit paid.
  2. Fixed interest rate 2.5% guaranteed on the deposit amount for 3 years.
  3. Money will be available once the initial period is over allowing you to make a second investment.

Cons

  1. You’ll still need to save the deposit amount
  2. Increases risk as you’re taking on more equity
  3. You’ll need the help of a family member willing to be liable for three years
  4. Money will be tied up for three years 

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