Blog Archives

Joint borrower sole proprietor mortgages set for take-off in 2018

26.01.2018

It may not be the catchiest of names but if you haven’t yet heard of a joint borrower, sole proprietor (JBSP) mortgage, chances are this year you will. The JBSP mortgage has been around ever since first-time buyers struggled to purchase property on their own and had to turn to their parents to help, combining two deposits and incomes.

But they really started to grow in popularity from April 2016 when a 3 per cent stamp duty surcharge on second homes was introduced. Suddenly, parents buying homes with their children found they had to pay an extra 3 per cent stamp duty on top because they owned another property, even though their child was a first-time buyer. The JBSP mortgage got round this by allowing two incomes to be taken into account for mortgage purposes but with only the child’s name going on the property deeds so there was no extra stamp duty to pay.

However, demand for JBSP mortgages has really taken off since last November when the Chancellor announced in his Budget that first-time buyers would not pay any stamp duty on properties costing up to £300,000 (or the first £300,000 of a £500,000 property in more expensive locations such as London). Once again, a first-time buyer purchasing with someone who is not a first-time buyer, such as a parent, would otherwise miss out on this tax break but the JBSP mortgage gets round this in a completely legitimate way.

Since the beginning of this month we’ve noticed a steady increase in enquiries from people looking for the solution of a JBSP mortgage. This increased demand is resulting in more lenders coming into this market, so rates are increasingly competitive, which is great news for borrowers. We expect this situation to only improve so do get in touch for more information.

Adrian Anderson
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Adrian Anderson

Bank of Mum and Dad becomes ninth biggest ‘lender’

04.05.2017

It is difficult to remember the last time Anderson Harris arranged a mortgage for a first-time buyer who didn’t have some form of assistance from parents or had inherited a large sum for a deposit. House prices have increased significantly over the past few years while salaries have risen at a much slower rate, making it extremely difficult for first-time buyers to purchase a home.

Research out this week from Legal & General reveals what we already suspected – that parents are significantly helping their offspring onto the housing ladder, to the tune of £6.5bn this year. This is similar to the amount lent by the Yorkshire Building Society, the country’s ninth biggest mortgage lender.

Hopefully, these parents will be gifting the deposit rather than lending it, as lenders will take a loan into account when calculating affordability. Because of this, parents may be interested in other options, such as becoming party to the mortgage to help their child to borrow more, assuming the parent has a strong income. Metro and Barclays offer ‘joint borrower/sole proprietor’ mortgages which have proved popular with first-time buyers as the parent is on the mortgage and liable for it, along with the child, but does not have to be party to the property deeds. This means the parent can avoid potential capital gains tax on disposal of the property and the extra 3 per cent stamp duty will not be applied when the property is purchased. The other advantage is that as long as the child can prove to Barclays that they can afford the mortgage in their own right at a later date, then the parents can be released from their obligations.

Another popular product is the Barclays Family Springboard mortgage where the first-time buyer doesnt need a deposit as long as a family member or helper can provide 10 per cent of the property price as security in a savings account. This is returned after three years. 

Jonathan Harris
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Jonathan Harris

Three things every first-time buyer should know

14.09.2016

Buying your first home is an exciting time but it can also be daunting. Below we offer three top tips to get you started:

  1. Start monitoring and cutting back on your spending 3-6 months in advance of applying for a mortgage. Keep your bank account operating in credit or within its limit and stop high levels of discretionary spending. Also, let go of any regular committed expenditure, such as the gym membership that you don’t use. Lenders will scrutinise your bank statements to assess conduct and spending patterns to establish affordability so present yourself in the best possible way.
  2. Start thinking about the sort of property you want to buy and set yourself a realistic budget and stick to it. Consider the re-sale of the property‎. It’s your first property and your circumstances are likely to change over time, so being able to sell this property without too much difficulty will help move you on to your next move/purchase.
  3. Be prepared to take the advice of the professionals you engage with in the buying process, such as an independent mortgage broker like Anderson Harris, and don’t always go for the cheapest option. In life, you often end up getting what you pay for and if you go for a cheap solicitor, for example, you may find they are inundated with work and can’t deal with your purchase in a timely fashion.
Jonathan Harris
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Jonathan Harris