Lloyds lend a hand...too good to be true??

joel10873

hey all hubby and i are first time buyers and have been to see mortgage dvisor re the lloyds lend a hand mortgage

was just wanting peoples opinions on it really? i cant see any catch to it and it really does seem too good to be true. in my experience if thats the case then it usually is too good to be true LOL

Just wondered if anyone had any opinions, good bad indifferent???

hillcats

Can you supply a link to what you are looking at...

joel10873

http://www.lloydstsb.com/mortgages/lend_a_hand.asp

i have been into branch and there are fees to set up etc but there are with all of the lloyds mortgages i looked at

just wondered if anyone had any experiences or opinions?

nomoneytoday

I would check if the person offering the "helping hand" earns a decent rate of interest, and what would happen if they need the 20% back for another purpose?

DannyboyMidlands

The downsides seem to be that you pay a bit too much in fees and interest for the mortgage and your benefactor recieves not quite enough on their savings.

Is the benefactors money at risk if you default? I assume that it would be.

opinions4u

It's a 95% mortgage.

Your parents (or whoever) have to put their money (20% of the purchase price) at risk for 42 months - if you get repossessed they could loose their money. The savings rate they get for that period may not be competitive - certainly not best buy.

joel10873

yes the money is at risk if you default however we have been paying rent of significantly more than the mortgage amount for ten years so default is not a worry

as for the interest being low the 20% would either go into a savings account where he earns interest or into a deposit on the house where he doesnt so in that respect any interest is better than nothing

no you cant get the money out early, but again if it was used as a standard deposit he couldnt either so thats not an issue

yes the fees are relatively high but the interest rate on the mortgage itself is comparable to the lloyds standard 75% mortgage rates

other than that can anyone see any other pitfalls?

P.S. thankyou for your opinions

kingstreet

How does it compare with the Marsden deal?

http://www.themarsden.co.uk/mortgages/products/offset-mortgages/dso168-3-49-percent

joel10873

Ah fantastic thanks Kingstreet i wasnt aware of that one, i have been scouting round looking for similar offers but hadnt found one!

i will look into that one asap to see how it compares!

DannyboyMidlands

If he is happy to risk the money, why not just give it to you as a deposit? Then you can get a mortgage from anyone you like. HSBC/1st Direct trackers at sub 3% for example.

Instead of borrowing 95% you'd be borrowing 75%. The difference in payments is his interest.

joel10873

He is happy to do that Dannyboy i just felt more comfortable only tying it in for the three / four years although i havnt completely written it off as an option yet:)