A new building society is being launched which aims to make it easier for families to help each other, following the strains caused by the financial crash of 2008.
The Family Building Society, which opens for business today, plans to inject further competition into the sector by offering a flagship “family mortgage”, which aims to help the younger generation get onto the housing ladder and is available to people with deposits as low as five per cent.
The mortgage enables parents, grandparents or other relatives to put money into a savings account which is linked to the home loan. The money then acts as security so that the mortgage holder can pay a lower rate.
The parent or grandparent also has the option to forgo interest on the savings account, so that the mortgage holder will pay a lower overall rate of interest. The Family Building Society is a trading name of National Counties Building Society, which started out in 1896 and is based in Epsom, Surrey.
Yesterday, Mark Bogard, the society’s chief executive, told the Yorkshire Post: “After 2008, people’s lives changed in terms of what was needed to progress financially.”
He added: “We have done a lot of research and there’s no doubt that family ties and
responsibilities remain strong and the generations want to help each other.
We have pondered how different generations can lend support without giving away money today that they themselves might need tomorrow.”
It is believed to be the first new building society to be launched in the UK in more than 30 years.
The new society’s products, which will include savings accounts, care fees planning, equity release and insurance, can be accessed via its website or through a call centre.
The Family Building Society is offering a special mortgage option for divorcees who are trying to start out again, called the “low start” mortgage.
Faced with domestic upheavals, such as divorce or taking time off for maternity or paternity leave, borrowers may take advantage of “stepped” monthly payments which are kept at low levels for the first two years of the term of the mortgage.
People can start off by making interest-only payments and then gradually move towards repaying interest and capital.