UK: Family Deposit Mortgage launched by Nationwide

Nationwide has launched a new Family Deposit Mortgage that will allow families to raise capital from their existing property to help a family member buy a home. The mortgage works by allowing consumers to borrow against the equity in their home and gift the additional borrowing to a family member in the form of a deposit. The deposit can be provided to any family member including their children, grandchildren, spouse, parents or grandparents. The product is only available direct at a branch or through intermediaries.

To access this product, the family member providing the help needs to have their mortgage with Nationwide, with borrowers holding a mortgage with another institution needing to remortgage to Nationwide in order to raise a deposit by borrowing against equity in their home, while existing Nationwide borrowers can borrow the additional amount as a further advance. The buyer receiving the funds also has to take out their own mortgage with Nationwide.

RFi Group research reveals that there may be some resistance to the product, with 76% of parents or grandparents who are likely to provide financial support to their children/grandchildren in buying a home, prefer to for gift them money to help raise the deposit, suggesting that the need to borrow in order to provide a deposit may not appeal to all consumers.

Whether this product will prove to be popular remains to be seen. RFi Group research reveals that there may be some resistance to the product, with 76% of parents or grandparents who are likely to provide financial support to their children/grandchildren in buying a home, prefer to for gift them money to help raise the deposit, suggesting that the need to borrow in order to provide a deposit may not appeal to all consumers.

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