NatWest has unveiled a new product to help first-time buyers secure a property, even if they lack sufficient savings or good credit history. The NatWest Joint Borrower Sole Proprietor Mortgage is set to enhance the mortgage borrowing capacity of the eligible customers, enabling them to transition on the housing ladder with the assistance of a friend or relative. This product, already being utilized by other lenders of mortgages, allows a property to be purchased in an individual’s own name and the mortgage liability split with a non-owning borrower. With rising costs of property and the challenges most first-time buyers face in being granted a mortgage, this new product is a quick solution. In this article, I’ll explore what a Joint Borrower Sole Proprietor mortgage is, its eligibility criteria, and the potential benefits and risks it offers both buyers and their supporters.
How Does the NatWest Joint Borrower Sole Proprietor Mortgage Work?
The Joint Borrower Sole Proprietor (JBSP) mortgage allows a first-time buyer to apply for a mortgage alongside a friend or family member who does not intend to own the property. Although the mortgage is joint, the buyer’s name alone will be on the title of the property. The greatest feature of this mortgage is that the liability of the loan is jointly borne by the applicant and non-owning borrower. This enables buyers to purchase something they cannot afford alone. By introducing a non-owning borrower, i.e., a parent, relative, or even a friend, the primary applicant’s ability to borrow for a mortgage is increased, opening up to a larger loan. Potentially significantly increasing the chances of mortgage approval for those with difficulty in affording large deposits or poor credit history.
Eligibility Criteria for the NatWest Joint Borrower Sole Proprietor Mortgage
NatWest’s JBSP mortgage does have some qualifying requirements that the applicant will need to meet in order to be approved. These are designed to give assurance that the borrower will be able to afford their mortgage payments but also make the process secure for all parties involved.
- Minimum Income Threshold: The main applicant will need a gross annual income of at least £20,000. This can include any kind of income accepted, including salary, bonus payments, and other income.
- Age Restriction: Applicants must be between the ages of 18 and 75 years.
- Non-Owner Borrower: The co-borrower is not necessarily a relative. One’s friend can also act as the co-borrower, expanding the list of potential first-time buyer assistance.
- Mortgage Exclusions: Joint Borrower Sole Proprietor mortgage is excluded for certain plans such as Right to Buy or Shared Equity.
- Residential Property Only: The product is only available for Residential Purchase Products, and the customers must be purchasing a property to live in as residence and not buy-to-let. Maximum Number of Applicants: Only two applicants are allowed: the primary owner/occupier and the non-owning borrower.
- Independent Legal Advice: As a safeguard for the non-owning borrower so that they fully understand their role, they will have to seek independent legal advice before completing the mortgage. This is an important step in the process to protect all parties involved.
NatWest First-Time Buyer Support
Alongside the new Joint Borrower Sole Proprietor mortgage, NatWest has gone one step further by rolling out their mortgage affordability process:
- Improved Affordability Calculator: NatWest has enhanced its affordability calculator, which now allows it to be easier to compute Loan-to-Income (LTI) ratios on residential capital and interest mortgages. This helps customers determine more accurately how much they can borrow.
- Selective Products Up to 95% LTV: For chosen customers, NatWest offers selective LTV ratio mortgages of up to 95% in order to make first-time buyers more easily able to get onto the housing market.
- Deposit Contribution: NatWest accepts deposits and gifts from family members, which are dealt with as if they are the customer’s own deposit. This helps those who lack adequate savings for a large deposit but have family members who can help them with their purchase.
- Dual Income: The bank also considers dual income sources when assessing affordability, so that first-time buyers can apply on the basis of all dual income sources.
Legal and Financial Impacts of the Joint Borrower Sole Proprietor Mortgage
While the NatWest Joint Borrower Sole Proprietor mortgage is advantageous in numerous ways, it should be noted that both individuals possess significant legal and financial implications. The non-owning borrower is made liable for the mortgage, meaning they will assume responsibility for the debt in the event the primary borrower cannot repay the loan. Prior to proceeding with this proposal, it is necessary that the buyer and non-owning borrower obtain independent legal advice and speak with a qualified mortgage advisor. It will be possible for them to fully understand what is involved and what obligations are being required by the mortgage.
Louis Mason, Director of Marketing and Communications at Oportfolio Mortgages, said, “The Joint Borrower Sole Proprietor mortgage is an excellent innovation within the first-time buyer marketplace. It offers a solution to purchasers who may be struggling to obtain a mortgage on their own while allowing family and friends to assist their loved ones in realizing their dream of homeownership. We would always advise our customers to seek both mortgage and legal advice before proceeding, however, since the financial and legal risks are shared.”
Speak To A Mortgage Specialist
NatWest Joint Borrower Sole Proprietor mortgage presents a worthy opportunity for first-time purchasers to become homeowners earlier than ever before. Working with a friend or family member, the purchasers have the ability to increase their lending potential and acquire their dream property, even though they are meeting mediocre deposits or credit. But do your research, so do make sure you get independent legal advice and a professional mortgage adviser before doing anything at all. If you’re considering taking out the NatWest Joint Borrower Sole Proprietor mortgage or you’d like to know more about your mortgage options, please contact Oportfolio Mortgages today to book an appointment with one of our expert advisers.
