Joint Borrower Sole Proprietor – ‘The Bank of Mum and Dad’
20 October 2020
In a recent article1 published by The Guardian, it was found that – ‘Nearly one in four home purchases this year will be backed by the “bank of mum and dad” – up from fewer than one in five in 2019 – as buyers struggle with the economic fallout from the Covid-19 crisis.’
Buckinghamshire Building Society offers a Joint Borrower Sole Proprietor (JBSP) mortgage, which allows parents to support their children getting onto the property ladder.
A recent JBSP case highlights how this works in practice. (All names have been changed)
Dan is an apprentice IT technician with the NHS. His mother, Jane, is a Finance Manager at the local County Council. Jane and her husband wanted to help their son get on the property ladder. Dan has saved £10k towards his deposit and his parents gifted him the remaining amount that made the Loan to Value 77%. In addition, because Dan is on a low starting income of £10k, which will rise to £25k after 1 year, Jane will be named on the mortgage to help with payments. Dan will move into his new flat, and as his income rises, he will be in a position to take over the mortgage payments. We assessed budget planners using current income and future income and this coupled with both participants having excellent credit history has meant that we were able to lend them the required amount of £109,999.
Tim Vigeon, Head of Lending commented on the launch – “In this difficult environment, we are committed to offering flexible and unique approaches to lending here at Buckinghamshire Building Society. We base the term of the mortgage on the sole proprietor’s age and this allows us to agree lending terms up to 40 years.
We have seen a significant increase in JBSP enquiries during the Covid-19 crisis, which demonstrates the need for human bespoke underwriting and a common sense approach.
For more information, please contact Tim Vigeon, Head of Lending on 01494 877250.
