The Post Office has launched a mortgage designed to help first-time buyers get onto the property ladder without the need for a deposit. The deal – known as the ‘family link’ mortgage – works by giving the first-time buyer a 90 per cent loan-to-value mortgage secured against the property they’re buying plus an interest-free five-year loan secured on a close relative or parent’s home.

There’s a catch – the parental home needs to be mortgage-free for the buyer to be eligible. But unlike alternative family mortgages, this one costs the parents nothing so long as the buyer repays the loan on time.

The buyer makes two separate repayments for the first five years – one towards the assistor’s mortgage, which is interest-free, and another towards the 90 per cent mortgage, which is charged at (time of writing this) a pretty expensive 4.98 per cent for a five-year fixed rate. The deal is fee-free though.

Because the deposit loan is secured against a relative’s property, both properties are at risk of being repossessed by the bank if you fail to keep up with your payments. For this reason, please do get separate legal advice on the implications.

For further information on Property matters, please contact Louise Godfrey

Small print: Maximum mortgage size: £500,000 Maximum term: 35 years

Your assistor must be a close relative including parents and step-parents, brothers and sisters and step-brothers and step-sisters.

You must be a first-time buyer in order to apply. For joint applications, this applies to both buyers. You will be assessed on your ability to meet the repayments for both mortgages.

Your minimum income needs to be at least £20,000 and you must be able to provide evidence of this.

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