More difficulties for first-time buyers as guarantor scheme closes

25/02/2010

First-time buyers may find it even harder to get on to the property ladder as a leading high-street bank is to scrap its guarantor mortgages.

Halifax has announced that it to end the scheme as of next month.

The products are being withdrawn due to a lack of demand, the bank said.

However, the arrangement has often been crucial in getting first-time buyers onto the property ladder.

Under the arrangement, Halifax lent up to four times the salary of the parents, often allowing the child to buy a bigger property than if their mortgage was based on their own salary.

The bank got its security from knowing that the parents would be liable for payments if children defaulted.

Without the scheme, younger people could find it hard to gain access to credit as banks appear to be reigning in their lending.

A spokeswoman for Lloyds Banking Group, Halifax's parent company, said that the company's new Lend a Hand scheme would replace the guarantor idea.

The scheme uses a parent's savings account to help contribute to the child's mortgage.

She added: "Given this new activity we are finding that the demand for guarantor mortgages is reducing and now represents a tiny proportion of new business and one that brokers have shown no real appetite for."

Posted by Jim Mead

Tags; Housing Debt and Bills,

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