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If you're thinking about helping a loved one buy their first home, it's normal to have a lot of questions about what you're getting involved with.

We've answered the most common questions below, but if you have a question not on the list, please call us. 

If you're the borrower and you have some questions, we've created a separate page of frequently asked questions which you may find useful.

Who owns the property?
What happens if more than one family member wants to contribute?
Will I get regular statements too?
What am I liable for?
What if the value of the property falls?
What happens if I or someone else providing support dies?
Does money provided as security have to stop working while it's helping the borrower?
Can money be released before the 10 years are up?
Can money be tied up for more than 10 years?
What happens if the borrower loses their job?
If I provide security am I properly protected?
What fees are there to pay?
Why don't other lenders offer something similar?
Who is the Family Building Society? How safe are they?

Who owns the property?

Like any other mortgage, the property is owned by the borrower. Whilst you may provide financial support, you have no rights to the property.

What happens if more than one family member wants to contribute?

Up to twelve family members can contribute. This is a big help for the borrower. Any money used as security for the mortgage will always remain in separate accounts, not combined into one account.

Will I get regular statements too?

The borrower will receive annual mortgage statements. If you provide security with a Family Security or Family Offset Account you will also receive regular statements.

What am I liable for?

If you have provided money as security, or have given a charge over a property you own, you need to be fully aware that money to this value may be called upon to make up any shortfall in the first 10 years. This may happen if sale proceeds are less than the mortgage balance and costs. If you have provided property as security and are unable to meet this liability, your property may be repossessed by us to recover this debt.

Your liability to make up any shortfall is proportionate to the amount of additional security each set of family members have contributed.

Provided the mortgage payments are up to date, after 10 years the charge is released and the money or property is no longer at risk from a shortfall on sale.

You will be required to take independent legal advice before the borrower is committed to the purchase.

What if the value of the property falls?

House prices do rise and fall even if the general trend in the UK has been upward. Other circumstances, including the borrower’s earnings, will also change. Across 10 years it’s likely that the borrower will experience both significant peaks and dips in prices. At the end of that period, and as long as mortgage payments have been kept up to date, the charge over savings and / or property you provided will be released.

Where the Family Offset Account option was chosen when the mortgage was taken out, the offset support is removed after 10 years (in some cases it may be longer – please see this questions below). Payments are likely to rise at this point as the borrower takes responsibility for repaying the whole mortgage. If, due to unforeseen changes in circumstances, the borrower is unable to meet the mortgage payments then it may be necessary for the borrower to sell the property to repay the mortgage. Alternatively it may be possible to remortgage to another lender.

What happens if I or someone else providing support dies?

The death of a security provider doesn’t change the Family Mortgage arrangements. The estate of the deceased person remains bound by the terms of the Family Mortgage and the charge given over savings and / or property remains in place. This can have implications for the distribution of the estate.

You may wish to review their Will to take account of the support being provided through the Family Mortgage and simplify administration of your estate. Alternatively, it may be possible to arrange appropriate life insurance to cover this eventuality – please speak to your adviser or contact us to be put in touch with one.

Does money provided as security have to stop working while it's helping the borrower?

There are two ways that savings can be used to help the borrower:

1 In a Family Security Account, savings can act as security for the mortgage which will typically bring the interest rate down for the borrower. This rate is likely to be favourable when compared to the interest rate for borrowing 95% of the property value without the additional security. We’ll continue to pay interest on your savings if you have chosen this option. 

2 Alternatively, you can choose to reduce the amount on which interest is charged within the mortgage by placing savings in a Family Offset Account. You won’t receive interest, but your money is still working hard for the borrower. The interest that would be paid on your savings cancels out the interest that would be charged on the equivalent part of the mortgage. With mortgage interest likely to be higher than the interest a savings account would have received, you could be passing on a significant benefit. 

Can money be released before the 10 years are up?

The Family Mortgage is designed to last for up to 10 years. The mortgage will be reviewed at the end of each fixed rate period, usually three or five years, chosen by the borrower. Depending on which specific combination of fixed rate terms are selected, for example using one five year term followed by two three year terms, the mortgage may extend beyond its expected 10 year period. 

It may be possible to release money provided purely as security at one of these points if the balance of the mortgage is 75% or less of the value of the borrower’s property.

Where money has been placed in a Family Offset Account, it provides security and reduces the amount of the mortgage on which interest is paid. Again money could be released after a review if the mortgage balance is less than 75% of the value of the borrower’s property. 

It may be that both a Family Offset Account and a Family Security Account are being used and in these cases some money could be released depending on the outcome of the loan to value assessment.

Can money be tied up for more than 10 years?

Money deposited in the Family Security Account is released after 10 years provided the mortgage payments are up to date. Where the Family Offset Account option was chosen, whilst the money will no longer be at risk once the charge over it is released, the return of the money will be deferred until the end of the fixed rate product term applying at the 10 year point.

The precise return date depends on the combination of fixed rate periods that is chosen by the borrower. For example, if a five year fixed rate is followed by a three year fixed rate and then another five year fixed rate, then the money in the Family Offset Account will be available after 13 years.

What happens if the borrower loses their job?

We know that young buyers are wary of taking out a mortgage using a charge over some of the value in their parents' home, or using their parents' savings. It’s good to know that as part of the Family Mortgage, subject to meeting certain conditions, we’ll meet mortgage payments for up to six months on a one-off basis while the borrower gets back on their feet if they became unemployed through no fault of their own. This is built into the Family Mortgage and costs no extra. 

Please ask about the limitations and exclusions for this cover if you have any questions.

If I provide security am I properly protected?

The security you provide is at risk if the borrower’s property is sold for a price which does not cover the amount due under the terms of the mortgage. This could happen if there has been a fall in property values or if the mortgage has increased because the borrower can no longer meet their mortgage payments.

What fees are there to pay?

You can find a list of all our fees here.

Why don't other lenders offer something similar?

The Family Mortgage is unique because it offers you the opportunity to be helped by your family in a combination of ways. This means you and your family could choose just one of our options to help you with additional security on your home, or they could use a combination of two, or all three ways to help you get onto the property ladder.

Who is the Family Building Society? How safe are they?

The Family Building Society was launched in 2014, as part of National Counties Building Society. National Counties Building Society was set up in 1896 and has a long history of securely looking after people’s money. The Family Building Society was launched with an aim of offering innovative solutions, such as getting on the property ladder with as little as a 5% deposit, without having to borrow more money from family or another scheme. By ‘thinking outside the box’ the Family Building Society looks at the issues facing people today, and provides a different way of doing things. 

Family Building Society is a trading name of National Counties Building Society which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This means the building societies have strict rules and regulations to follow.

What next?

We've created a short video that explains how family can work together to help a first time buyer. Alternatively, you can read more about the different ways using the links below:

Representative example 

A mortgage of £305,330 payable over 33 years initially on a fixed rate for 3 years at 2.94% and then on our variable Managed Mortgage Rate, currently 4.79%, for the remaining 30 years would require 37 monthly payments of £1,205.49 and 359 monthly payments of £1,508.35, plus one initial interest payment of £764.12.

The total amount payable would be £587,738.90 made up of the loan amount plus interest £281,534.90 and an application fee of £175, a product fee of £599 and a mortgage exit fee of £100.

The overall cost for comparison is 4.5% APRC representative.   

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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 Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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