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Principality launches family assisted 95% LTV mortgage

Principality Building Society has launched a mortgage which allows borrowers with a minimum of a 5 per cent deposit to use a family member or friend’s savings to boost their deposit.

The borrowers deposit together with the family savings must add up to 25 per cent of the property value. The building society will take a legal charge over the family member’s savings, which the person has to place in a Principality savings account. The person cannot access their savings until August 31, 2015.

After August 31, 2015, if the loan-to-value has fallen from 95 per cent to 90 per cent, through repayments and house price increases, the legal charge on the savings account will be lifted.

The direct-only mortgage is fixed at 4.49 per cent for four years and there is a product fee of £499.

Principality mortgage manager Christopher Johnson says: “The advantage of allowing parents to use their savings as security for the mortgage is that they retain ownership of their money. They will continue to earn interest on their savings, while the child gets access to mortgage rates usually available to those with a larger deposit.”

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