Nationwide launches new mortgage product for mutual family support

22 March 2017

  • Society’s Family Deposit Mortgage lets customers utilise equity in their property
  • They can then use it to assist relatives to secure a deposit for a home of their own
  • Preferential rates for both new customers and existing Nationwide mortgage borrowers

Nationwide Building Society is launching a new mortgage range specifically designed to allow families to raise funds from their existing property to help another family member buy a home from Wednesday 22 March.

The flexible Family Deposit Mortgage is aimed at relatives looking to support one another, such as homeowners helping their children to take their first steps onto the property ladder. It is also available to help those moving to a new home as well as relatives looking to assist older parents.

Both existing Nationwide mortgage members and those remortgaging to the Society from another lender can apply for the Family Deposit Mortgage to raise extra capital for a family member. The buyer receiving the funds must take out their own mortgage with Nationwide, selected from any product in the standard mortgage range.

According to Nationwide analysis, a significant proportion of new mortgage lending involves a deposit that is wholly or partially gifted. The average first time buyer deposit in the UK is £28,200, rising to £65,600 in London, while 35 per cent of first time buyers currently opt for a mortgage term of more than 30 years to spread the cost.*

All of the additional monies raised must be provided as a fully gifted deposit**. Those with no current mortgage on their homes, and those in receipt of retirement income, can also make use of the Family Deposit Mortgage to raise deposit funds.

Those gifting the deposit to the buyer can access up to a total mortgage borrowing of 80 per cent loan to value (LTV).

New borrowers - those remortgaging to Nationwide and raising additional capital with the sole purpose of helping a family member buy a home - can access the Family Deposit Mortgage to raise the funds required.

These are:

  • 2 year fixed rate, 5 year fixed rate and 2 year tracker rate mortgage deals with a £999 fee or no fee.
  • Rates start at a competitive 1.15% for the 2 year tracker and 1.20% for the 2 year fixed rate, both with a £999 fee, a discount of 0.09% on the core product range.
  • Available either direct from Nationwide or through mortgage brokers.

For existing Nationwide mortgage members, those helping the buyer can borrow the additional amount as a Further Advance.

These are:

  • 2 year fixed rate, 5 year fixed rate or 2 year tracker, all with no fee.
  • The discount on the core rate for the Further Advance is 0.20% and rates start at 1.34% for the 2 year tracker and 1.39% for the 2 year fixed rate.
  • Available direct through Nationwide

Nationwide’s Head of Mortgages Henry Jordan said: “Our Family Deposit Mortgage range has been launched in recognition of customer demand for a flexible and accessible way to use the wealth tied up in people’s homes. The aim is to help not only first time buyers but also home movers to secure their own property.

“We know that trying to raise a deposit can be the most significant barrier to becoming a home owner. This Nationwide range will enable families to give mutual support to each other and provide new options for home ownership.”

Notes to Editor:

*Average Average deposit: UK £28,200, London £65,600 (Q4 2016, source: CML), based on average first time buyer deposit of 16% of Nationwide first time buyer house price); 35% of first time buyers opt for a mortgage term over 30 years (Q4 2016, source: Regulated Mortgage Survey)

**Funds must be wholly gifted towards a family member’s Nationwide mortgage and cannot be loaned.

Family Deposit Mortgages:
Those eligible for the Family Deposit Mortgage are existing Nationwide customers taking out a further advance, customers looking to remortgage from another lender with capital raising, or those looking to take out a mortgage if they have no existing mortgage.
Customers who are eligible can borrow up to 80 per cent LTV, to help a family member onto or up the property ladder with Nationwide, subject to standard lending criteria and affordability requirements.
Family member definition: Family members are classified as being a spouse, civil partner, parent, brother, sister, child, grandparent, grandchild or someone whose relationship with the applicant has the characteristics of a family relationship (such as a step child or partners).
The Family Deposit Mortgage cannot be opened online.
All of the additional funds raised through the FDM product must be gifted towards the ‘Buyer’s’ Nationwide mortgage and cannot be loaned. They cannot be used for any other purposes.
The ‘Buyer’ can select any product from the standard mortgage range, subject to the usual criteria and affordability requirements. Transactions for the ‘Buyer’ and ‘Helper’ will be carried out separately.
Borrowing in Retirement (BIR) applicants are able to take out a FDM, and standard BIR eligibility criteria will apply. All mortgages are subject to eligibility criteria, underwriting and conditions.

Key features of Nationwide’s fixed and tracker mortgage product range for new applications

1. Flexibility:

  • Overpayments (maximum of 10% of the initial amount borrowed per annum where an ERC applies to the product. Where a product is not subject to an ERC, there is no maximum overpayment allowance).
  • Apply for a Further Advance, the additional borrowing facility.

2. Free Standard Valuation: All standard valuations are fee free.

3. Maximum LTV:

  • 95% LTV mortgages are available to:
    • First-time buyers and home movers.
    • Existing Nationwide mortgage borrowers switching at the end of their current deal or moving home.
    • Save to Buy customers.
  • Maximum 75% LTV on new build flats and 85% LTV on new build houses

4. Base Mortgage Rate

  • Any mortgage products reserved on or before 29 April 2009 will revert to the Base Mortgage Rate (BMR). If the borrower chooses to switch to a new Nationwide mortgage product, the new product will currently revert onto our Standard Mortgage Rate (SMR).
  • Both are variable rates which we may vary in accordance with our mortgage terms and conditions. However, the BMR is guaranteed to be no more than 2% above the Bank of England base rate, whilst the SMR has no upper limit or cap. If the borrower chooses to switch to a new product from a BMR, it is not possible to switch back to the BMR at a later date.
  • All mortgages reserved on or before 3 March 2010 include the option to apply for a payment holiday and borrow-back facility. Any mortgages reserved after this date will no longer include these facilities.
  • If the borrower is currently letting their property they will be unable to switch to a new mortgage deal and their mortgage will automatically revert to the Nationwide variable rate as stated in their mortgage offer.

5. Early repayment charges (ERCs)

If you repay a mortgage early or make an overpayment of more than your overpayment allowance, you may need to pay an Early Repayment Charge. For Nationwide mortgages reserved after 8 October 2014, you would need to pay a percentage of the outstanding loan amount as follows:

  Fixed Rate Deal Period
  2 years 3 years 4 years 5 years 10 years
Year 1 2% 3% 4% 5% 7%
Year 2 1% 2% 3% 4% 7%
Year 3 1% 2% 3% 7%
Year 4 1% 2% 7%
Year 5 1% 6%
Year 6 5%
Year 7 4%
Year 8 3%
Year 9 2%
Year 10 1%

ERCs don’t currently apply to our Tracker Rate mortgages.

About Nationwide

Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 18,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.