Mortgages for the next generation

A new building society has launched in the UK for the first time in three decades, and it’s causing a stir in the property market. The Family Building Society is a spin off from the long-established National Counties Building Society, and has been set up to specialise in financial products catered for families.

Many of its products are aimed at family members who are keen to help each other financially but without wanting to hand over their savings for good to other generations. This has largely been done in response to many buyers relying on the ‘bank of Mum and Dad’ to raise a deposit. Whilst most parents are keen to help their children, many aren’t able to afford to do so financially, in fear of not knowing how long they’ll live for and whether they’ll need the money later on for their retirement. They’re aware that once they give money away to their children, it’s gone, and many parents are anxious about leaving themselves financially exposed in later life.

Financial products include a family mortgage, which enables parents and grandparents to unlock cheaper borrowing costs for their children by offering part of the equity of their own home, or a cash deposit that will earn interest to part-guarantee a new mortgage. They can also use their savings to offset mortgage interest, enabling them to help out without having to give their cash away.

The building society also offers mortgages which cater for households faced with life-changing events, such as starting a family or divorce. Borrowers can have the option of interest-only payments for the first year of the loan, or stepped monthly payments to help them to get on their feet.

I personally think this is a welcome move in the mortgage market. The way people are buying property – and financing it – is changing, and I think it’s great that financial solutions are being created to cater for this. We have many clients who are helping their children buy property and any carefully thought through innovation in a changing market can only be a good thing.

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