Family Mortgage FAQs

Like any other mortgage, you will own the property. Whilst family members may provide you with financial support, they have no rights to the property.

No, the Family Mortgage isn’t only for first time buyers. If you already own a home and need some help to move to a bigger or different property, you can still get a mortgage with us. The home you have with the Family Mortgage needs to be your only residence.

You can apply to us directly by speaking with one of our dedicated Mortgage Advisers, or you can apply through an alternative mortgage adviser, if you already have one.

To help us process your application quickly we've produced a checklist for Owner Occupier mortgage applications which highlights the minimum documents we require on receipt of your application.

When you look at getting a mortgage, there are a few things you need to know and have prepared for us.

 You need to think about:

 A. How much have you saved for a deposit?

 B. How much do you need to borrow?

 C. How much can you afford to repay each month?

Download our checklist for Owner Occupier mortgage applications here. This is a list of the minimum documents we require on receipt of your application to help us process your application quickly. 

When you are ready to apply for a mortgage we’ll ask for evidence of your income with three months’ payslips. If you are self-employed we’ll need the last two years’ self-assessment calculations with confirmation from HMRC that they have been accepted, or if corrections have been made. 

We may also require evidence of some of your regular outgoings if you pay rent and/or a loan payment. 

When we look at your application we have to consider the affordability of the mortgage for you. This means looking at how much is going in vs. how much is going out of your account, and how much you can afford to repay each month. If you have commitments to paying any other money back, such as credit cards or student loans, we will consider how these affect the amount you can repay each month if we offer you a mortgage.

You can find a list of all our fees for mortgages here.

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.

You will be responsible for the majority of the fees when buying a new home. However, your family will need to get independent legal advice which may mean they will be charged a fee.

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

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.

We understand you may be wary of taking out a mortgage using a charge over some of the value in your parents' home, or using your parents' savings. It’s good to know that as part of the Family Mortgage, subject to meeting certain conditions, we’ll meet your mortgage payments for up to six months on a one-off basis while you get back on your feet if you became unemployed through no fault of your own. This is built into the Family Mortgage and doesn't cost extra. 

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

You are responsible for making the payments due under the mortgage even if your circumstances change in future. 

If 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 read the question 'Can money be tied up for more than 10 years?'). Your repayments are likely to rise at this point as you take responsibility for repaying the whole mortgage. If, due to unforeseen changes in circumstances, you are unable to meet the mortgage payments, it may be necessary for you to sell the property to repay the mortgage. Alternatively it may be possible to remortgage to another lender.

If your circumstances change we’ll review your mortgage and look at your current loan to value (LTV), i.e. the amount of money outstanding on your mortgage compared to your total house value.

If you have a joint Family Mortgage with a partner and then separate, there are a few options available to you;

• If you both want to stay on the mortgage and both maintain the mortgage payments, you can continue to as per the current agreement until the end of the mortgage term. 
• If you want to sell the property, you would need to follow the normal redemption procedures for a Family Mortgage, and any early redemption would be subject to ERCs.
• If you or your partner want to remain in the property and transfer ownership into your / their sole name, we would need to reassess criteria such as income, expenditure and affordability.

If your circumstances have changed and you’d like further information on what to do, you can contact our friendly Mortgage Service Team on 03330 140146 or email mortgage.service@familybsoc.co.uk

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.

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. If this happens, you will have to make up the shortfall up to the value of the security you have provided or something like that. 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.

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.

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.

The death of a security provider doesn’t change the Family Mortgage arrangements. The estate of the deceased person will remain 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.

 Your family members providing security may wish to review their Will to take account of the support being provided through the Family Mortgage and simplify administration of their 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.

The minimum property value is £120,000. For full details on properties we will and won't accept, along with other criteria we consider, read through our lending criteria.

Your mortgage adviser will be able to confirm this with you as we do have some restrictions, but as a general rule we accept properties of a standard construction in England and Wales that are over £120,000. If you have any questions, or aren’t sure if the type of home you want to buy will be accepted, please give us a call or read our lending criteria.

Your existing property will need to be sold and the mortgage repaid. As long as the sale price is high enough, any charges on family's property are released and any security in the form of savings returned to your family members providing them. You and your family can then decide if you wish to apply for a new Family Mortgage on the new, larger, property.

House prices do rise and fall even if the general trend in the UK has been upward. Other circumstances, including your income, will also change. Across 10 years it’s likely that your property may 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 provided by your family 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 read the question under the family section: 'Can money be released before the 10 years are up?'). Your monthly repayments are likely to rise at this point as you take responsibility for repaying the whole mortgage. If, due to unforeseen changes in circumstances, you are unable to meet the mortgage payments then it may be necessary for you to sell the property to repay the mortgage. Alternatively it may be possible to remortgage to another lender.

A property is in negative equity if it’s worth less than the mortgage secured on it and it’s normally caused by falling property prices. As the Family Mortgage is a 95% mortgage, this means as the borrower may have only provided a 5% deposit, they’re more at risk of negative equity if there is a drop in the housing market. 

If they continue their mortgage payments and don’t plan on remortgaging to another lender or moving home in the near future, being in negative equity won’t cause an issue. The borrower won’t be at risk of repossession or have to pay extra charges just because they’re in negative equity. As long as they carry on paying their mortgage as agreed, they’ll still be able to switch to a new product with us when their fixed term ends.

However, negative equity can be a problem if the borrower wants to sell their home. Unless they have savings they can use to repay the difference between the value of their home and their mortgage, they may find it difficult to move. 

It can also be difficult if the borrower wants to remortgage to another lender, perhaps to a fixed rate or a cheaper deal. Many lenders will not let people with negative equity switch to a new mortgage when their existing one ends. Instead, they will normally be moved onto the lender’s standard variable rate which is generally more expensive.

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.

For more information on who we are and what we do please visit our about us page.

The Government currently offers one type of ‘Help to Buy’ scheme, called the Equity Loan.

Equity Loans are loans from the Government that are only available for new builds, through a registered builder. You need to have a minimum 5% of the purchase price as a deposit, and the Government will lend you up to 20% of the purchase price. After five years you have to start repaying the Government fees, which increase each year up until you’ve owned the home for 25 years, or you sell your home, whichever is sooner, when you then have to repay the loan to the Government. Loaning you 20% will enable you to access lower mortgage rates, but you will have to factor in repaying the Government a fee each year after five years, and also saving up to repay the loan, or prepare to have it deducted from the house sale when you go on to buy your home. The Government also benefits from any increase in your house price value when you go to repay the loan.

If you live in London the Government has increased the maximum loan amount with the Help to Buy scheme to 40%, if you have a 5% deposit. This means you will need to get a mortgage on the remaining amount up to 55%. The Government loan works in the same way as the 20% loan, and after five years you will be charged a fee for the loan, along with the expectation you will pay back the Government loan percentage when you sell your home, or after 25 years, whichever is sooner.

In comparison, with the Family Mortgage you don’t have to pay any additional fees after five years, and you don’t have to repay any additional money when you want to sell your home, or if you stay there for 25 years. This means that you benefit 100% from any increases in property prices, and you won’t need to factor in having less money for your next house purchase, or saving up to repay after 25 years. You also aren’t restricted to buying a new build through a registered builder; in fact, you can buy the home that suits you best.

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.