Higher interest rates and increasing house prices have made it difficult for first-time buyers to get on the property ladder in recent years. For many first-time homebuyers, seeking help from friends and family can pave the way to home ownership and a springboard mortgage could be the perfect solution.
In this article, we explain what a springboard mortgage is, how it works, the pros and cons of choosing this type of mortgage as well as some of the alternative ways that you may be able to get on the property ladder.
What is a springboard mortgage?
A springboard mortgage accepts applicants without the need for a deposit, as long as they are supported by a friend or family member who can deposit money into an account as security instead. Springboard mortgages help people who may find it difficult to save a deposit but can afford the monthly repayments on a mortgage. A springboard mortgage also allows friends and family to help you get a mortgage without gifting you the money directly.
Partner SpotlightSpecialist mortgage advice for first-time buyers
Our partner Tembo is a specialist mortgage broker that offers tailor-made mortgage solutions for people with smaller deposits including Guarantor, LTV and first-time buyer schemes.
How does a springboard mortgage work?
A springboard mortgage offers the borrower a mortgage up to 100% loan-to-value (LTV). This means the lender will provide the full value of the property as a mortgage loan, with no deposit required.
To secure the mortgage, you will need a guarantor who can deposit 10% of the mortgage amount into a savings account and this money will need to be locked away for an agreed period of time. A guarantor is essentially somebody who you have a long-standing relationship with, usually a friend or family member. The guarantor will have the initial loan amount returned to them at the end of the agreed initial period, plus any interest earned.
How does the Barclays Springboard mortgage work?
The Barclays Springboard Mortgage works on the basis of a 5-year fixed-rate mortgage loan that is offered with no deposit or a deposit amount that is up to 5% of the property price. Your friend or family member will be required to transfer 10% of the mortgage value into a Barclays' Helpful Start savings account where it must stay for at least 5 years. The money deposited in this account will accrue interest at a rate of 1.5% above the Bank of England Base Rate over 5 years, after which it can be withdrawn by your guarantor.
Barclays Springboard mortgage key features
| Mortgage key feature | How it works |
| Mortgage term | Up to 35 years |
| Minimum mortgage loan value | £5,000 |
| Maximum mortgage loan value | £500,000 |
| Type of mortgage | 5-year fixed-rate mortgage |
| Mortgage repayment type | Capital and interest - repayment |
| Rate of interest on 100% LTV mortgage | 5.54% |
| Rate of interest on 95% LTV mortgage | 5.30% |
| Early repayment charge | 4% of the balance of the mortgage |
| Deposit | 0% up to 5% of the property value (No deposit is needed for 100% LTV) |
| Security | 10% of mortgage value deposited into Barclays Helpful Start Savings Account for 5 years |
Helpful Start savings account key features
| Savings account feature | How it works |
| Qualifying criteria | Age over 18 years old
UK resident |
| Single or joint account holders | Either single or joint account ownership |
| Interest payments | Interest is calculated on the daily statement balance of your Helpful Start Account
Interest paid is variable - 1.5% above the Bank of England base rate Interest is paid on the interest that accrues as well as the original deposit amount |
| Frequency of interest payments | Paid monthly on the working day after the day on which interest becomes payable |
| Cancellation | The account must remain open during the initial fixed period of the springboard mortgage |
How to qualify for a springboard mortgage
Like any other mortgage, the Barclays Springboard mortgage is offered to applicants who meet certain lending criteria. You will have to complete a full mortgage application and may also be asked to complete a mortgage interview. These will establish your income, outgoings, financial responsibilities and credit history.
Barclays will check that you can afford your monthly mortgage payments based on your other financial commitments as well as your income. It is normal for a lender to access your credit file so it can be helpful to check this in advance so that you can scan it for any anomalies and rectify these ahead of making your mortgage application. You can find information about how to do this in our article, 'How to improve your credit score quickly'.
Can I get a Barclays Springboard mortgage with no deposit?
Yes, it is possible to secure the Barclays Springboard mortgage without saving a deposit for your property purchase. However, it is worth noting that you may be able to secure a better mortgage deal with a lower rate of interest elsewhere.
Pros and cons of a Barclays springboard mortgage
Pros
- You can own a property sooner
- Your family/friends can help you without giving you money
Cons
- The rate of interest charged is relatively high
- Your family member or friend cannot access the savings deposit for 5 years
Alternatives to a springboard mortgage
If you’re considering a springboard mortgage then it is likely that you wish to buy a property either without a deposit or with a small deposit. There are a number of mortgage solutions available to homebuyers in this situation including:
- Skipton Track Record Mortgage - a mortgage that offers 100% of the property value as long as you have a track record of paying rent for at least 12 months that is equivalent to or more than your likely mortgage payments.
- Rate reducer mortgage - a way of buying a newly built property where you receive a discount that is applied to the initial period of your mortgage. This can help reduce the interest rate significantly, making it more affordable.
The rate of interest on a springboard mortgage is relatively high so you should think carefully before making your decision. You may be able to secure a lower interest rate if you can save a deposit, which in turn, will lower your monthly mortgage payments and the overall cost of buying a house.
Other routes to home ownership include shared ownership and right-to-buy which may provide you with alternative ways to own your home.
How to arrange a supported mortgage
Finding the right housebuying solution for your particular circumstances can be difficult when you consider the number of mortgage deals in the market as well as the various schemes that provide routes to home ownership. You will need to gather all of your documentation to ensure that you can evidence your income, outgoings and financial commitments.
To maximise your chances of a successful mortgage application it can be very helpful to get the advice and support of a mortgage broker. Additionally, a declined mortgage application could affect any further applications you make, so it is best to try and avoid this scenario. Mortgage brokers have in-depth knowledge about the various mortgage deals in the market and the criteria set out by each lender and will match you to the best solution based on your circumstances.
If you do not have a mortgage broker then Tembo* is an excellent first-time buyer mortgage broker where the advisers have specialised knowledge about first-time buyer mortgages and schemes. The advisers at Tembo can use a combination of solutions to help you get on the property ladder.
Alternatively, the free online mortgage broker, Habito* provides a similar service and searches over 90 lenders' mortgage deals to find the best mortgage solution for you.
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