Skipton Building Society rebrands its “Joint Borrower Sole Proprietor” mortgage scheme to “Income Booster”
Skipton Building Society has announced it will rename its “Joint Borrower Sole Proprietor” scheme to “Income Booster” to help combat mortgage jargon.
Income Booster is a scheme that allows potential home buyers to add up to three extra people onto their mortgage without making them an owner of the property. Their income is factored in, which means the potential home buyer could borrow more than if they were buying on their own. They may also be able to avoid paying the additional stamp duty, which second homeowners need to pay if they are on the title deeds of more than one property.
By helping increase the amount able to borrow through assessing the main applicant’s income along with the income of their friends or family, borrowers could take the first steps onto the property ladder or widen the scope of properties. This could mean they are now able to afford an extra bedroom or that perfect location, which may not have been possible using just their income.
It is important all parties get Independent Legal Advice before agreeing to a Joint Borrower Sole Proprietor mortgage.
Worked example of Skipton's Income Booster mortgage
Someone with an income of £25,000 could look to borrow £112,250 on their own through Skipton, based on the maximum borrowing amount of 4.49 x their income. By adding on another borrower with a £25,000 income, their borrowing amount increases to £224,500 – double the amount versus buying alone.
Please note this calculation is an estimate based on Skipton's current maximum Loan to Income ratio and is for illustration only. For a more accurate calculation of borrowing, Trinity Financial's brokers are on hand to assess the market for the most generous affordability calculations.
As part of Skipton’s research, it was found that 83% of first-time buyers who are receiving some financial support towards their first home would find it “impossible” to get on the ladder without it.
What happened to the old-fashioned guarantor mortgages?
Many banks and building societies used to offer guarantor mortgages where parents helped their kids onto the property ladder.
Aaron Strutt, product director at Trinity Financial, says: When the government changed the stamp duty rules, there was a shift to Joint Borrow Sole Proprietor to try and mitigate the stamp duty liability.
"Getting on the property ladder has become increasingly challenging, and for many the first-time buyer schemes like list enable borrowers to get on the property ladder with financial assistance."
Do many lenders offer Joint Borrower, Sole Proprietor or Income Boost mortgages?
Quite a few mortgage lenders are offering Joint Borrower Sole Proprietor Mortgages mainly designed for parents to help their children onto the property ladder.
Increasingly the scheme is being used by older borrowers who need the support of a family member to stay living in their own home or separating couples where one partner wants to buy out the other.
One challenger bank currently has good acceptance criteria on its Joint Borrower Sole Proprietor mortgages:
- Up to 95% loan-to-value mortgages (New Build properties limited up to 90% loan-to-value on houses and flats).
- Up to four applicants on the mortgage, with a minimum of one applicant on the property deeds. The additional applicants normally must be immediate family members. The definition of immediate family includes parents, grandparents, children, grandchildren, and siblings. Adopted, in law, half, and step members are also included in the definition.
- Income can be accepted from up to four applicants at full income multiples, subject to affordability
- Maximum age 80 considered (mortgage term based on the oldest applicant).
- A gifted deposit from an immediate family relative can be accepted.
- Interest-only and repayment options are available, although minimum deposit requirements apply.
Call 020 7016 0790 to let our brokers confirm how much you can borrow or book a consultation
The information contained within was correct at the time of publication but is subject to change
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