Lloyds TSB's new Lend a Hand mortgage is designed to help first-time buyers onto the property ladder as it is available for loans up to 95 per cent of the property ladder. The rate is fixed at 4.39 per cent for three years – which is highly competitive and there is a £995 arrangement fee.
However, while the borrower only needs to put down a deposit of 5 per cent, his or her parents, grandparents or friends, must set a further 20 per cent of the property's value against the loan. This money will be held in a savings account paying a fixed rate of 3.5 per cent. No money can be taken out of the account until the borrower has built up a 10 per cent equity stake in the property. A legal charge is held against this, reducing the risk to Lloyds TSB because if the property is repossessed, the bank's exposure to that property would be just 75 per cent of the original value rather than 95 per cent.