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SECURITY THROUGH SAVINGS - HOW IT WORKS

Many first time buyers can save enough money for a small deposit but that’s about it. As a result they have to borrow a high proportion of the cost of their first property.

Lenders generally charge a higher interest rate on the mortgage when somebody wants to borrow more than 75% of the value of the property they want to buy. They will see it as a bigger risk. 

How can the Family Mortgage help?
Our answer:
Family Security Account

 
If a buyer can find a 5% deposit, from savings or perhaps a gift, the Family Mortgage allows a family member to provide security for the buyer’s mortgage by depositing savings in a Family Security Account.

This money acts as security for the mortgage and reduces the risk, so the Family Building Society can offer a lower rate of interest than might otherwise be the case.

This reduces the monthly payments for the buyer while your savings continue to earn interest. 

The information provided is a summary of the key features of the account and is not intended to be a substitute for reading the Product Features leaflet and General Conditions for our Savings Accounts booklet.  

Summary box


Account name

FAMILY SECURITY ACCOUNT

What is the interest rate?

Rate effective from 28 August 2016 Gross AER1 
£5,000+ 0.75% 
  • Interest is calculated daily and paid annually on 1 January

Can the Family Building Society change the interest rate?

Yes, the interest rate is variable and may be changed. Please refer to Section 14 of the General Conditions for our Savings Accounts booklet for more information on when we may make changes to the interest rate and how this will be communicated

What would the estimated balance be after 12 months based on a £5,000 deposit?

Opening balance Projected balance (Gross) 
£5,000 £5,037.50 
  • This projection assumes that the account is opened with the stated amount with no additions or withdrawals made. Projected balance is at the end of 12 months
  • All projections are provided for illustrative purposes only and do not take into account individual circumstances
  • Actual interest may depend on the date the account is opened and the date that interest is paid

How do I open and manage my account?

  • The Family Security Account can only be opened by a family member of a Family Mortgage applicant requiring the security provided by this account
  • The account can only be applied for by post
  • A minimum of £5,000 must be deposited
  • Additions are not permitted
  • The maximum that can be held in the account is 20% of the value of the linked Family Mortgage prime security
  • Instructions for the account can only be made via post

Can I withdraw money?

  • Withdrawals or account closure are only available following a review of the linked Family Mortgage. Please refer to the 'Family Security Account terms' section of the Product Features leaflet for more information

Additional information

TAX STATUS: Interest is paid gross from 6 April 2016 due to the introduction of the Personal Savings Allowance (PSA). You will need to declare any income from savings interest earned over your PSA through a self-assessment tax return to HM Revenue & Customs
 


This issue may be withdrawn at any time without prior notice.

1 AER stands for Annual Equivalent Rate and illustrates what the annual rate would be if interest was compounded.

All financial information correct on 30 November 2016.


Things to remember
Family members providing financial support should be aware that if the buyer is unable to meet the mortgage payments, that the security they have provided is at risk if the property needs to be sold and there is a shortfall.

However, during the first 10 years we do provide the buyer with important protection by automatically meeting the buyer’s mortgage payments for up to six months on a one-off basis should they become unemployed through no fault of their own.


What next?

You probably have a lot of questions about how the Family Mortgage could work for you - we are here to help! If you're in a bit of a rush but would like to know more, you can complete a 'Four Quick Questions' form here.

Find out more about the other Family Mortgage options:

You can use one, two or all three of these methods in combination to help a buyer get the home they want.


Representative example:

A mortgage of £352,260 payable over 34 years initially on a fixed rate for 3 years at 2.69% and then on our variable Managed Mortgage Rate, currently 4.54%, for the remaining 31 years would require 37 monthly payments of £1,318.47 and 371 monthly payments of £1,665.44, plus one initial interest payment of £806.57.

The total amount payable would be £668,342.20 made up of the loan amount plus interest £315,208.20 and an application fee of £175, a product fee of £599 and a mortgage exit fee of £100.

The overall cost for comparison is 4.3% APRC representative.

THE MORTGAGE WILL BE SECURED ON YOUR HOME

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Family Mortgage - Security through savings case study
Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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