Blog Archives

How to protect yourself when buying a home with a partner

21.02.2017

With such a gap between property prices and income it is highly likely that most people will end up buying their first home with someone else – whether it is a partner, friend, parent or sibling. Two incomes and two deposits will mean your money goes a lot further.

However, there are issues to bear in mind when buying property with somebody else. In terms of the mortgage itself, all the typical issues around affordability and meeting the lender’s stress testing still apply. Lenders will look in great detail at each applicant’s income and expenditure, especially fixed outgoings such as personal loans and credit cards. It makes sense for those buying to ensure their finances are in good order before making a mortgage application.

The other issue is that with a joint mortgage the liability for each borrower is joint and several. This means that the lender can pursue each applicant individually and jointly if the mortgage falls into default so if your buying partner doesn’t pay their bit, you are also responsible for it. This element, combined with the affordability issues, means that if a couple split up or a friend wants to go their own way, the lender will need convincing that the remaining borrower can afford the mortgage before the other party is relieved of their obligation. There will also be considerations of buying the other party out and the potential need to release equity to do this. There are plenty of potential pitfalls so applicants need to consider these before committing and seek independent mortgage advice.

Jonathan Harris
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Jonathan Harris

Boost for older borrowers as Santander relaxes interest-only criteria

07.02.2017

Santander is extending its maximum interest-only lending age from 65 to 70. This is very welcome news from one of the biggest players in the market as interest only continues to play a significant role for many borrowers. This is especially true of those in receipt of bonus income and with a credible repayment strategy for repaying their mortgage over and above fixed monthly reductions.

The older borrower very often has more options available to them in terms of repayment strategy but has in recent times struggled to qualify for interest-only loans simply because of their age. By extending the age bands, Santander is extending its reach to this credible and affluent market.

Santander is also removing the minimum gross income level for interest only, which is another welcome addition that benefits younger borrowers who require an interest-only mortgage.

This move pitches Santander and Barclays into a potential policy and criteria war, which can only help borrowers for whom interest only is a key driver as it increases the options available to them at competitive rates.

Jonathan Harris
Posted by
Jonathan Harris