Lloyds Introduce “Lend A Hand” Loans
Over the course of the past few months, we have started to see some signs of improvement in the housing and home owner loan markets and the key to this is an increase in the number of first time buyers now entering the market and applying for loans.
Although the number of first time buyers has risen steadily over recent months, one of the biggest hurdles they still face is that of raising a large enough deposit to meet lenders’ currently low loan to value ratios. The Lloyds banking group has now introduced a new scheme to help first time buyers get on to the market with a much higher loan to value product.
Known as the “Lend a Hand” home owner loan, the new deal from Lloyds allows first time buyers to take a loan for up to 95 per cent loan to value, with part of the security for the loan being taken on their parents savings account with the bank.
The parents do not actually have to give up their savings to fund the deposit and they will still receive interest on the balance of their savings. Approximately half of the parents interviewed said they thought it was a good idea, particularly due to the fact that they still received interest on their savings and the scheme would also allow them to re use the money to help their other children get the loan they required in the future.
Stephen Noakes of Lloyds TSB said “Lloyds TSB’s lend a hand mortgage lets parents use their savings without actually having to write their children the cheque. Their deposit is held in a savings account paying a competitive rate of interest and, after three years, they are free to use their savings again as they wish, maybe to help their next child buy their first home.”
