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Halifax scraps guarantor mortgages

Halifax is to stop offering guarantor mortgages through brokers from next month.

The products allow parents to act as security on their children’s mortgage, but Halifax says these deals are being withdrawn due to a lack of demand.

The lender will instead offer another first-time buyer product, previously offered through Lloyds TSB, called Lend a Hand, which is not available through mortgage brokers.

Lloyds says the product has proved more popular than Halifax’s guarantor mortgage.

Lend a Hand requires borrowers to put up a 5 per cent deposit, but if parents have savings equal to 20 per cent of the property value in a Lloyds savings account, borrowers can access the rates available to someone with a 25 per cent deposit, while their parents continue to earn interest on their savings.

A spokeswoman for Lloyds Banking Group says: “We were a strong supporter of the first time buyer market in 2009, representing nearly 50 per cent of the shared equity, shared ownership market and driving new innovation like the LTSB Lend a Hand scheme which enables customers to get 95 per cent lending through taking a charge on a parent or grandparents savings account.

“This drive continues in 2010 as we look to provide more support in new build and find ways to extend the Lend a Hand activity which already accounts for a third of first time buyer lending in the LTSB channel.

“Given this new activity we are finding that the demand for guarantor mortgages is reducing and now represents a tiny proportion of new business and one that brokers have shown no real appetite for.”
 

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