Since the housing market is still difficult for most, an additional avenue of opportunity has opened up for purchasers who require added assistance: using up to four incomes on a single mortgage application. Due to Family Building Society’s revised Joint Borrower Sole Proprietor (JBSP) mortgage, UK purchasers, including first-time purchasers, second steppers, and families, can now considerably increase affordability by pooling incomes from several family members. This is particularly timely in the light of ongoing concerns about high house prices and tighter lending.
What Is a Joint Borrower Sole Proprietor (JBSP) Mortgage?
A JBSP mortgage allows a person or two individuals to own and live in a house and up to two other family members to assist in funding the mortgage via their incomes, without actually owning the property. This product enables supporting family members to avoid the extra stamp duty that would otherwise be charged on second homes. Owner-occupiers and buy-to-let purchasers can opt for Family Building Society’s JBSP product, on flexible terms with open age limits, up to 95 on repayment terms at the end and 89 on interest-only at start.
A staggering 2.2 million first-time buyers have been priced out of property ownership since the financial crash of 2008, according to new figures released by the Building Society Association (BSA). This generation, often dubbed the “missing millions”, have been locked out of the housing market largely due to mortgage affordability, runaway house prices, and higher interest rates.
While 7.2 million individuals or couples were forecasted to buy their first home between 2006-2025, only 5 million were successful. For the other 2.2 million, saving for a deposit and passing affordability tests are still an actual barrier, especially as new homeowners now spend about 22% of their income on mortgage repayments against 18% a relatively short while ago.
More and more young buyers, particularly under-30s, are now using high loan-to-income (LTI) and high loan-to-value (LTV) mortgages to stretch their finances to the extreme, typically needing assistance from relatives to be in a position to climb onto the ladder. Meanwhile, renting continues to cost more of their pay packet than a mortgage would, adding to the hurdle of raising the deposit. It is here that Joint Borrower Sole Proprietor (JBSP) mortgages, like those offered by Family Building Society, are able to provide a lifeline.
By allowing for up to four incomes to be included in a single application, without adding in other legal owners of the property, JBSP mortgages give buyers the power to overcome affordability barriers, increase the borrowing power, and ultimately achieve homeownership. Whether parents, grandparents, or even siblings who are lending income support, JBSP plans fill the widening gap between house prices and wages.
How Does it Help Mortgage Affordability to Have Four Incomes On One Mortgage?
Higher house prices have made it difficult for single-income and even double-income households to acquire the size of mortgage they need. By allowing up to four incomes on a single application, Family Building Society offers access to much greater borrowing capacity. For example, a first-time buyer earning a salary of £30,000 per year may only qualify for a mortgage of £135,000 on their own. Through incomes from family members, including parents, grandparents, or siblings, they can potentially obtain a much greater loan, thereby turning home ownership into an achievability.
The approach is not just being enjoyed by young buyers. It can be turned around, and it is known as a “Reverse JBSP”, where children help parents to stay in the family house during old age, giving families more flexibility in handling property wealth.
Key Features of the JBSP Mortgage
- Four incomes on one mortgage
- 90% Loan-to-Value (LTV) mortgages up to £500,000
- Mortgage size maximum now £1,000,000
- No additional stamp duty for benefitting relatives
- Appropriate for a range of supporters, such as parents, grandparents, brothers, sisters, aunts, and uncles
- Owner occupier and Buy to Let option available
This product is particularly beneficial for individuals in line of sight of retirement age, as it allows lending up to age 95 on repayment mortgages and age 89 on interest-only mortgages.
Expert View: A Saviour for Struggling Buyers
Louis Mason, Oportfolio Mortgages’ Marketing and Communications Director, commented:
“This is the sort of innovation we need in the UK mortgage market. The majority of first-time buyers and second-steppers are struggling to get on or move up the ladder despite having family members willing to help them out. A mortgage product allowing up to four incomes, but also protecting those benefactors from second-home tax liabilities, is a game-changer. It allows more lending power while keeping homeownership achievable for many who would otherwise be priced out.”
Want to Have Four Incomes on a Mortgage? Call Us Today
If you are looking to maximise your affordability for a mortgage, or would like to help a loved one with buying their first home, our skilled advisers at Oportfolio Mortgages can help you. Whether you are a first-time buyer, a parent wishing to assist your children, or desire to self-fund your retirement via homeownership, we can assist in clarifying your options and maximising your affordability. Call Oportfolio Mortgages today to book a free consultation.
