The first new building society to enter the market in three decades has dubbed itself ‘The Family Building Society that will help a family across the generations’.
The mutual opened its doors on July 14 and its flagship scheme aims to allow parents, grandparents or other relatives to pool their savings or use some of the equity in their homes to help their children get on to the property ladder.
Named the ‘family mortgage’, it offers deposits as low as five per cent, with the relatives money put into a savings account linked to the home loan that will act as security, thus providing the mortgage holder with a lower repayment rate.
Further reductions on the mortgage’s interest can be invoked if the family members who have provided the security forgo interest on the savings account. Mark Bogard, chief executive, described the mutual as ‘a modern society with traditional values’.
The new building society is actually a part of the century old Epsom-based National Counties Building Society but operates as a separate entity and with no branches, this new offering is an internet and telephone only operation.
Special ‘Low-Start’ mortgages are also available for those going through personal upheaval, such as divorce or maternity or paternity leave, and is an interest-only option that lets borrowers minimize their initial interest payments.
Mr Bogard, said the mortgages on offer would be a boost for younger borrowers to get on to the property ladder: ‘We are living longer and need to provide for old age care.
‘Parents want to support their children to independence but have their own needs to consider.
‘Young people want independence but often have student debt and find it hard to save for a deposit. Also, they don’t want to be a further burden on their parents.’