The post office offers mortgages with 100% loan to value (LTV). One of these mortgages is the post office family link mortgage which requires you to put down no mortgage deposit and essentially get a 100% loan to value (LTV). The post office mortgage is able to offer you a 100% mortgage by instead using your family members unmortgaged property as some sort of initial collateral for a 5 year period by linking both mortgages together.
What is the Post Office Family Link Mortgage?
The post office family link Mortgage is essentially a way for your family to fund your mortgage deposit by using the value of their home.
This means you can have this post office mortgage with 100% loan to value (LTV).
The post office family mortgage is geared towards borrowers who have parents who own their properties outright and borrowers who can afford to make their monthly repayments on a mortgage but are struggling to save a mortgage deposit.
The Post office family mortgage works by giving you a 100% mortgage. 90% on the property you want to buy and 10% of your parent or family members property. The mortgage on your family members property is interest-free and must be repaid within 5 years. During the first 5 years, you will make repayments on both mortgages. You will then continue to pay off the mortgage on your property.
You will essentially have gotten a 100% loan to value post office mortgage with no mortgage deposit.
To be eligible for the Post Office mortgage with 100% loan to value (LTV)
- You must be a first-time buyer
- You must have an accessible income of at least £20,000
- The maximum property price is £500,000
- You and your family members property must be in the UK.
- You must have a family member with an unmortgaged property
Both your home and your family members home can be repossessed if you fail to keep up your monthly mortgage repayments and you should seek independent financial advice.
Alternatives to a post office mortgage with 100% loan to value (LTV)
You may also be eligible for other mortgages from mortgage lenders which are similar to the post office mortgage with 100% loan to value (LTV).
You may be able to get some home buying government schemes for first-time buyers and home movers which could increase your mortgage deposit or reduce the total cost of purchasing the property.
- Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.