Six homes first-time buyers can afford with the new 100% mortgage from the Post Office

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First-time buyers without a deposit may have been thrown a lifeline by the Post Office, which has launched a new mortgage deal just for them.

Called the Family Link mortgage, it allows first-time buyers to borrow 100 per cent of the price of the property that they want to buy. With the average UK salary at around £26,000, it means a typical first-time buyer could afford a property with a price tag of £120,000 using the Post Office deal – based on a maximum 4.5 times income multiple.

Here at MailOnline Property, we pick six bargain properties that have been reduced in price and now have an asking price of £120,000. Some of the houses have seen their values reduced by almost 40 per cent, with prices having initially been set close to £200,000.


Buy your own slice of luxury! This three-bedroom house in Wigan, Greater Manchester, is on the market for £120k

Buy your own slice of luxury! This three-bedroom house in Wigan, Greater Manchester, is on the market for £120k

There are several catches with the new 100 per cent mortgage from the Post Office, with perhaps the biggest being that it is expensive. The interest rate is set at almost 5 per cent.

But with limited options, this may be a price that buyers are willing to pay to get onto the property ladder.

The former chapel in Cumbria's Appleby-in-Westmorland is on the market for £120,000 via Cumberland estate agents

The former chapel in Cumbria’s Appleby-in-Westmorland is on the market for £120,000 via Cumberland estate agents

The Post Office deal works by borrowing 100 per cent of the value of the property that you want to buy using two mortgages.

The first mortgage covers 90 per cent of the value of the property and it is this rate that is comparatively high at 4.89 per cent for a five-year fix.

The second big hurdle is that you still need the assistance of the Bank of Mum and Dad or a close relative – and they must be mortgage free.

A parent or close friend may be better off lending you the 10 per cent deposit and you paying them back

This is because the remaining 10 per cent of the value of the property – the ‘deposit’ element – that you want to buy is covered by a mortgage taken out in joint names – yours and your relative’s. This loan is interest-free but must be paid within five years.

The Post Office’s Family Link mortgage comes with some cashback and no arrangement fees.

Ray Boulger, of mortgage brokers John Charcol, said: ‘It is an interesting product as it addresses the concept of family members wanting to help.

‘The rate on the 90 per cent part has been enhanced to reflect the interest-free loan taken to cover the 10 per cent, the principle of which is fair.’

Escape the rat race for £120k! This semi-detached property for sale is in Scotland's Perthshire, 24 miles to the north of Pitlochry

Escape the rat race for £120k! This semi-detached property for sale is in Scotland’s Perthshire, 24 miles to the north of Pitlochry

Mr Boulger explained that by combining both rates on each of the two mortgages, the overall rate on the Family Link mortgage for comparison is around the 4.39 per cent mark.

He said: ‘This rate is still quite high. If you have a 10 per cent deposit, you can get a rate on a 90 per cent loan-to-value mortgage for less than 2.5 per cent – although the Post Office deal also offers a good cashback.

‘The parent or close friend may be better off lending you the 10 per cent deposit and you paying them back.’

He highlights a five-year fixed rate mortgage from Digital Mortgages by Atom Bank with a rate of 2.44 per cent and, like the Post Office mortgage, no arrangement fee for those with a 10 per cent deposit.

So those lucky enough to able to ask the Bank of Mum and Dad to lend them the 10 per cent deposit would have cheaper options than borrowing the whole amount via the Post Office.

He concluded: ‘The Post Office is to be congratulated in devising a credible alternative way of helping some first-time buyers but in most cases, it will be better value to use two different lenders – particularly for larger mortgages, unless the rates are reduced.

‘At current rates any convenience from using a single lender is more than outweighed by the extra cost.’

Six houses reduced in price to £120,000…

1. Seven-bed house in Garston, Liverpool, reduced in price by 37 per cent

This end of terrace property has an impressive seven bedrooms – four of which are double and three are good-sized singles.

It has no chain and the sale is being handled by estate agents Move Residential.

The seven-bedroom property has seen its asking price reduced by a substantial 37 per cent

The seven-bedroom property has seen its asking price reduced by a substantial 37 per cent

Some updating is required, but it has the potential to be a large, modern, family home.

Some updating is required, but it has the potential to be a large, modern, family home.

The bedrooms are all a good size, including four that comfortably fit a double bed

The bedrooms are all a good size, including four that comfortably fit a double bed

 

2. Three-bed house in Appleby-in-Westmorland, Cumbria, reduced by 20 per cent

This former Methodist chapel has full planning permission to be turned into a three-bedroom house.

With extensive countryside views, it could become a stunning family home. It is being sold by estate agents Your Move.

The former chapel comes with full planning permission and is being sold via Cumberland estate agents

The former chapel comes with full planning permission and is being sold via Cumberland estate agents

There are extensive views across the Cumbrian countryside, for those wanting to escape the rate race.

There are extensive views across the Cumbrian countryside, for those wanting to escape the rate race.

 

3.  Three-bed house in Dalnaspidal, Perthshire, reduced by 20 per cent

The unique location alone should be able to sell this semi-detached property in Scotland’s Perthshire.

The hamlet of Dalnaspidal is 24 miles to the north of Pitlochry, which is a gateway to the Scottish Highlands.

The three-bedroom semi-detached property is set in an unique location in Scotland

The three-bedroom semi-detached property is set in an unique location in Scotland

It has a modern and comfortable interior that includes a lounge with room for a dining table

It has a modern and comfortable interior that includes a lounge with room for a dining table

 

4. Three-bed house in Wigan, Greater Manchester, reduced by 17 per cent

This house has been refurbished by the current owner and is ready to move into.

It includes a living room with a bay window and a kitchen with a separate utility room.

The three-bedroom end of terrace property has been refurbished by the current owner

The three-bedroom end of terrace property has been refurbished by the current owner

 The sale of the refreshed house is being handled by estate agents Entwistle Green

 The sale of the refreshed house is being handled by estate agents Entwistle Green

It comes with a living area that boasts a large bay window at the front of the house

It comes with a living area that boasts a large bay window at the front of the house

 

5.  Three-bed house in Redruth, Cornwall, reduced by 14 per cent

This three-bedroom property is within a few miles of the resort of Portreath on the north coast of Cornwall. The sale is being handled by estate agents Your Move.

The house is within a few miles of the resort of Portreath on the north coast of Cornwall

The house is within a few miles of the resort of Portreath on the north coast of Cornwall

The lounge has a fire with a stone surround and wooden flooring

The lounge has a fire with a stone surround and wooden flooring

The kitchen is large enough to accommodate a small dining room and chairs.

The kitchen is large enough to accommodate a small dining room and chairs.

 

6. Two-bed bungalow in Clacton-on-Sea, Essex, reduced by 8 per cent

This two-bedroom bungalow is within two-hundred yards of Jaywick’s seafront.

It includes a dining room, rear garden and off-street parking. It is being sold by Sheen’s estate agents .

This two-bedroom bungalow is within two-hundred yards of Jaywick's seafront.

This two-bedroom bungalow is within two-hundred yards of Jaywick’s seafront.

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