Springboard Mortgage

Potbellypig

Anyone ever done one? Seems too good to be true.

getmore4less

The rates(2.55%/2.75%).) are higher than the equivalent(2.19%/2.49%) 3y fix for the same money

The helpful start account interest rate(2%) is less than the mortgage rate(2.55%/2.75%).

Potbellypig

getmore4less wrote: »

The rates(2.55%/2.75%).) are higher than the equivalent(2.19%/2.49%) 3y fix for the same money

The helpful start account interest rate(2%) is less than the mortgage rate(2.55%/2.75%).

Thanks. For someone less intelligent - what does that really mean?

getmore4less

It costs more and ties up the donors money for 3 years

in effect for the 10%/100% case you are paying around 0.3% more on 90% and 1.74% less on 10% the bank earns about 1% on the 10%.


What about it do you think makes it too good to be true?

YHM

It is also quite restrictive on affordability (max 4x salary)

Smevchenko

OK, so there is obviously an argument that the rates you get are not the best, both for the mortgage and for the helpful start account.

But leaving that to one side, the Springboard Mortgage has helped me and my wife get our first property.

Now people will tell you that using this mortgage effectively means you actually cant afford it, as if you cannot save for a deposit, then you cant afford to maintain a house either.

My situation, 36 years old with a 1 year old child, and 8 years of renting behind me, meant I was desperate to start paying off a mortgage, and having something that might provide some security in later life. We had managed to save about 10k, but using this money wholly as a deposit would have meant we no longer had any savings left for any work needed for the house, and also for any emergencies that may arise.

We were fortunate that a parent was happy to help, and could afford to place 10% of the purchase price in a helpful start account for us. They may be able to make more on that money, saving it elsewhere, but they also have the satisfaction of being able to help their children get a foot on the property ladder.

The mortgage rate still gives us a monthly payment £200 below our last rental, so with added extras like buildings and contents, and life insurance costs, our bills are not too much higher than when we were renting. We can still afford to save a bit each month, and still have savings to fall back on for any household emergencies.

In our situation, it was a good solution.

getmore4less

The tie in is for 3 years and why these work is by the end of the 3 years you will have paid off some of the debt.

For the 100% at 2.75% it will depend on the term how much of the debt you have left.

£100k the payment and amount left at y3
35y £371pm £94,700
30y £408pm £93,300
25y £461pm £91,300
20y £542pm £88,300

As long as nothing drastic happens to values the LTV get under 95% allowing a regular deal after year 3


Landlords typically want more than 2.75% gross yield so the mortgage has builltin savings.

Smevchenko

getmore4less wrote: »

The tie in is for 3 years and why these work is by the end of the 3 years you will have paid off some of the debt.

For the 100% at 2.75% it will depend on the term how much of the debt you have left.

£100k the payment and amount left at y3
35y £371pm £94,700
30y £408pm £93,300
25y £461pm £91,300
20y £542pm £88,300

As long as nothing drastic happens to values the LTV get under 95% allowing a regular deal after year 3


Landlords typically want more than 2.75% gross yield so the mortgage has builltin savings.

25 year max term for the Springboard Mortgage

Potbellypig

getmore4less wrote: »

It costs more and ties up the donors money for 3 years

in effect for the 10%/100% case you are paying around 0.3% more on 90% and 1.74% less on 10% the bank earns about 1% on the 10%.


What about it do you think makes it too good to be true?

30+ years old with 12 years of renting and 2 children. We've got just over £10k saved but realistically need £25k for a deposit and other fees. I'll be 40 by the time that happens.



If a parent can effectively lend us £15k and see it again in 3 years, that is why it feels like it's too good to be true.



I see from other posts though that I'll be paying more in interest, but hey, can't have your cake and eat it.