The tie-up between the UK financial services arm of the multi-national Japanese conglomerate and Britain's biggest housebuilder means that for the first time parents can borrow the money to help their children onto the property ladder without either having to re-mortgage or put a second charge on their own homes.
The product is the only one of its kind currently on the market and is specifically designed to address current mortgage restrictions. Significant numbers of creditworthy first-time buyers are largely dependent on parental support because they do not have the 20 or 25 per cent deposit which lenders now require.
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But many parents are often reluctant to fund a deposit if any loan has to be secured against the principal family property.
Under the Hitachi Capital loan scheme, the typical buyer will only need to raise a deposit of five per cent. An 80 per cent mortgage is available from a number of High St lenders. And the remaining 15 per cent of the purchase price can be met through an unsecured loan from Hitachi Capital (UK) to the buyer's parents or legal guardian.
Hitachi Capital (UK) is offering unsecured loans of up to £50,000 for a period of 12 years at a fixed rate of 5.4 per cent. There are no early repayment charges and unlimited overpayments are allowed at any time during the agreement without penalty.
"We are genuinely excited about this tie-up with Hitachi Capital because it gives parents a low-risk way to reduce the size of the deposit which their children have to raise in order to buy a home of their own," said Mark Clare, Chief Executive of Barratt Developments.
"This product is ideal for parents who have sufficient income to service a loan but no available capital. Or people who have capital which is tied-up and which they do not want to access in the short-term."
"We know that there is enormous demand for home ownership amongst people under the age of 40 who are currently renting and this product will make it easier for them to take that all-important first step on the ladder."
(CD)
