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What is a family boost mortgage?
When people talk of a family boost mortgage, it can mean a few different things.
There is no specific ‘family boost’ mortgage product, but there are ways that an applicant’s family can help the borrower.
For instance, a guarantor mortgage. Some lenders are able to offer guarantor mortgages, however, they may have a different name.
Joint borrower, sole proprietor
A joint borrower, sole proprietor product is a form of guarantor mortgage.
The way it works is both applicants are named on the mortgage with only one being the registered owner, showing on the property deeds.
All applicants are responsible for making sure that the mortgage is paid, and if it isn’t, all parties will be negatively impacted (for example, arrears showing on a credit report).
A benefit to a joint borrower sole proprietor mortgage is that the borrower does not need their family member to be named on the deeds of the property, which may mean a saving in stamp duty.
The reason is, that many borrowers that join their family members on joint borrower sole proprietor mortgages already own a property themselves.
If they were to go on the deeds of another property to help out the family member, they would be charged additional stamp duty for having a second property, whereas, if they remained off the deeds, and the owner was a first time buyer, there would be a significant stamp duty saving.
Joint standard mortgage
Another way of boosting a family member’s borrowing capacity, is to join them on standard mortgage, and on the deeds.
With two incomes rather than one, this may boost the amount of borrowing that you are able to access.
However, it is not a decision to be taken lightly.
Once you are on a person’s mortgage, it may be difficult to come off again. The reason is, the lender will only allow you to do so if they believe that the mortgage passes the affordability assessment, in just one name.
With your joint obligation to make sure that the mortgage is paid, this may affect you borrowing what you need to on the property that you live in.
If you plan to join a family member’s mortgage to booster affordability, make sure that you fully discuss the pros and cons of doing so.
You should talk to an independent mortgage adviser to get a full understanding of your obligations.
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Can any family member help with a family boost mortgage?
Usually, lenders do not have a set criteria of which family members can join your mortgage.
If the property is going to be a joint borrower sole proprietor, lenders can be flexible on which family member you share the commitment with.
The most important thing is making sure that the case passes the affordability assessment taking into account the outgoings for both people.
This includes the home running costs for the applicant that will not live in the property.
If you were taking a standard mortgage and adding on another borrower, lenders are also usually flexible about who can join you.
Again, getting a full understanding of each applicant’s financial situation is fundamental. Lenders will fully underwrite the application taking into account all income and outgoings.
If you were looking at using a springboard mortgage, with a charge over a family member’s savings, lenders will usually have a list of who can contribute.
To find out more, you should talk to an experienced mortgage adviser.
Can you get a family boost mortgage for a buy to let?
It may still be possible to get a family boost for a buy to let mortgage.
For instance, if you are not meeting the income criteria for the application, you can sometimes add on a family member that meets the criteria.
With many buy to let lenders, only one applicant needs to meet the minimum income criteria.
If you are a first-time buyer, the majority of buy to let lenders will not consider you. Read more about first-time buyer buy to let mortgages.
However, if you were to add on a family member that already owns a property, this would open up more lenders.
Joint borrower sole proprietor is also available on buy to let properties with some lenders.
Adding on a family member to the mortgage, but keeping them off the deeds, may help you meet criteria that you did not meet before.
Your mortgage adviser will be able to discuss what options you have, and what may be available, if you add on another party to the mortgage.
Always think carefully about doing this and take professional advice.
Should I use a mortgage broker for a family boost mortgage?
If you are looking for a family boost mortgage, it would be recommended to use a mortgage adviser.
The reason is, regardless of which route you take to boost your borrowing, expert advice from an independent advisor will always be beneficial.
For instance, if you need a joint borrower sole proprietor arrangement, not all lenders offer this.
The chances are, if you go into your bank, they may not have this product.
If you were to add on a family member, it is important that they know the potential impacts that they may face in the future, if they help you out.
For example, if a family member joins your mortgage, and you make the payments yourself, they’re still just as liable.
The mortgage is £1,500 per month, they are not paying it themselves, this amount would be built into any affordability assessments in the future.
This means that if they try to get a mortgage themselves, this monthly payment is factored into the calculator so may stop them from getting what they need.
This is why expert advice is so important when you were taking a mortgage so you know the full potential impacts of your decisions.
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Conclusion
There are ways that your family can help you boost your mortgage capacity, for instance, joining you on the mortgage and deeds may be a way to boost your borrowing levels.
If they do not want to be an owner of the property, joint borrower sole proprietor is another method available with some lenders.
Also, equally responsible for the mortgage payment, they will not be an owner of a property and stamp duty will not be payable on their status, only the owners.
Springboard mortgages are a way of helping family members that struggle for a deposit.
They allow savings to be used as collateral for the mortgage, giving the lender additional assets as security, in case the mortgage goes unpaid.
Whatever route you decide to take to help out a family member, you should always take professional advice.
Your decisions today may affect you negatively in the future, if you do not do your due diligence.
If you would like I NEED ADVICE to match you with a mortgage adviser that can talk you through your options and how they may affect you in the future, please complete the contact form.
The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.
If you are seeking advice about a mortgage, you should consult a qualified professional.
