A MAJOR high street bank has launched a new mortgage product to help first time buyers borrow more.
Barclays Bank’s “mortgage boost” will let both first-time buyers and existing homeowners add another person to their application to increase the amount they can borrow.
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This could help them get on the property ladder with a smaller deposit or move to a larger home.
Anyone on the application will be responsible for the mortgage, but the extra name won’t need to own the property or be named on the deeds.
In an example provided by the bank, someone with an income of £37,500 a year and a deposit of £30,000 could typically borrow £168,375, allowing them to buy a home worth up to £198,375.
But with the mortgage boost, if they added another person with an income of £37,500 a year, they could borrow up to £270,000 – closer to the UK’s average house price of £282,000, according to the Office for National Statistics.
The product will run alongside Barclays’ existing “family springboard mortgage”, which lets helpers deposit a lump sum of up to 10% of the loan to help first-time buyers get a mortgage.
The mortgage boost will have a five-year fixed interest rate of 5.52% for a 95% loan-to-value deal or 5.76% at 100% loan-to-value up to a maximum amount of £500,000.
Loan to value is the amount a buyer puts down as a deposit versus the amount they borrow as a mortgage.
A higher loan to value represents a greater amount being provided by a mortgage rather than cash deposit.
The mortgage boost will also be available to use on buy-to-let mortgages as well as residential applications.
Nicholas Mendes, head of marketing at mortgage broker firm John Charcol, said of Barclays’ new offering: “In a year where 1.8million households will be coming off a low fixed rate into a higher rate environment, this will be a welcomed addition to the market support many existing borrowers and perspective buyers looking to get onto the property market.
“One of the main advantages of this scheme is that it allows borrowers to increase their borrowing capacity by including another individual’s income, which can be particularly useful for first-time buyers struggling to meet affordability criteria on their own,” he explained.
While the move was welcomed by many experts, some warned that taking on a mortgage for a home you don’t home is a big responsibility and it is not a decision to be taken lightly.
“It’s a really huge responsibility to take on. It means the person added to the mortgage is exactly as responsible for paying the mortgage as the person who owns the home,” explained Sarah Coles, head of personal finance at investment broker Hargreaves Lansdown.
“They could be in the frame for the full payment if the circumstances of the other buyer changes or if they get into mess financially. It will also affect their ability to borrow elsewhere, including their own mortgage.”
You can use a mortgage calculator on most banks’ websites to check how much you could borrow with your salary.
Most banks will let you borrow around 4.5 times your earnings, so the amount you could spend on a house is typically that amount plus any deposit you can put down.
Sian McIntyre, managing director of life moments at Barclays, said: “Buying a first home is a hugely important step in life and one that has unfortunately become tougher for many in recent years.
“We know people feel like they have to make huge compromises in order to save for a large deposit, and that family may want to help but cannot afford to.
“Mortgage Boost can help answer these challenges, supporting people to buy their first home earlier and without giving up on their other dreams.”
House prices woes
The new launch from Barclays comes as the average age of first-time buyers rose to almost 34 last year, according to Barclays’ own data, as people are being forced to delay buying their own homes amid rising house prices and mortgage costs.
Barclays said it had launched its product “amidst an increasingly difficult landscape faced by those looking to buy a property”.
The value of a typical home hit a record high of £293,999 in November 2024, according to the latest data from Halifax, one of the biggest mortgage lenders in the UK.
That figure was 3.9% higher than the same time in the previous year, when a typical house was worth £283,053.
And mortgages continue to be much higher than pre-pandemic levels, with the most competitive fixed rates sitting at around 4.2%, according to Moneyfacts.
Many homeowners are expected to come off low fixed rate deals they entered five years ago this year, meaning they will see a stark rise in their mortgage costs as they move onto more expensive deals.
A number of other lenders have launched new schemes to help people get on the property ladder or move to a bigger home in light of these difficulties.
Leeds Building Society recently increased the amount first-time buyers can potentially borrow in relation to their earnings, raising it from 4.5 times’ their annual salary to 5.5 times’ their salary, for example.
Different types of mortgages
We break down all you need to know about mortgages and what categories they fall into.
A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.
Your monthly repayments would remain the same for the whole deal period.
There are a few different types of variable mortgages and, as the name suggests, the rates can change.
A tracker mortgage sets your rate a certain percentage above or below an external benchmark.
This is usually the Bank of England base rate or a bank may have its figure.
If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.
A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.
SVRs are generally higher than other types of mortgage, so if you’re on one then you’re likely to be paying more than you need to.
Variable rate mortgages often don’t have exit fees while a fixed rate could do.
