Barclays Family Springboard: buy a house with 5% deposit

Barclays has launched the Family Springboard mortgage, giving homebuyers the chance to purchase a property with a 5% deposit. But is it any good?

First-time buyers with 5% deposits can expect to pay perhaps two to three percentage points more than someone who is borrowing with a 40% deposit. This can cost you hundreds of pounds extra per month.

Even so, the interest rates you’ll have to pay are still, on average, very low by historical standards, and they’ve sunk further this month.

Barclays Family Springboard mortgage

The new mortgage from Barclays is called Family Springboard.

It’s a three-year fixed rate at 4.69%, which works out at around £570pm for a 25-year, £100,000 mortgage. You pay £500 in booking fees, which Barclays calls an “application fee”. Expect to lose this fee if you pull out of the deal without a great reason. Barclays’ current account customers don’t pay this fee.

Property valuation costs will probably be £250-£300 and you’ll pay solicitor’s costs, as usual – another few hundred pounds.

The big snag

To bag this 5% deal, you’ll need guarantors to put up cash, which will be lost if you fail to repay your mortgage.

Your family has to put savings equal to 10% of the purchase price into a Barclays Helpful Start savings account. No withdrawals are allowed for three years.

The Helpful Start savings account pays the Bank of England base rate plus 1.5%, which currently means getting 2% interest before tax. This is not a lot of interest, considering the long tie-in period.

Barclays Family Springboard: buy a house with 5% deposit

Barclays has launched the Family Springboard mortgage, giving homebuyers the chance to purchase a property with a 5% deposit. But is it any good?

First-time buyers with 5% deposits can expect to pay perhaps two to three percentage points more than someone who is borrowing with a 40% deposit. This can cost you hundreds of pounds extra per month.

Even so, the interest rates you’ll have to pay are still, on average, very low by historical standards, and they’ve sunk further this month.

Barclays Family Springboard mortgage

The new mortgage from Barclays is called Family Springboard.

It’s a three-year fixed rate at 4.69%, which works out at around £570pm for a 25-year, £100,000 mortgage. You pay £500 in booking fees, which Barclays calls an “application fee”. Expect to lose this fee if you pull out of the deal without a great reason. Barclays’ current account customers don’t pay this fee.

Property valuation costs will probably be £250-£300 and you’ll pay solicitor’s costs, as usual – another few hundred pounds.

The big snag

To bag this 5% deal, you’ll need guarantors to put up cash, which will be lost if you fail to repay your mortgage.

Your family has to put savings equal to 10% of the purchase price into a Barclays Helpful Start savings account. No withdrawals are allowed for three years.

The Helpful Start savings account pays the Bank of England base rate plus 1.5%, which currently means getting 2% interest before tax. This is not a lot of interest, considering the long tie-in period.