The new mortgage scheme allows friends and family to be added for larger loans

A new mortgage lender is giving buyers the chance to apply for bigger loans by including family and friends in their home loan application. Known as a single owner mortgage (JBSP), this type of loan allows individuals to purchase properties that might otherwise be unaffordable.

Essentially, it allows a buyer to include a family member’s or friend’s income on the app, increasing the funds available for monthly repayments. These people’s income, which may include retirement income, is used to improve the calculations that determine how much the buyer can borrow.

Although these individuals do not own the property or appear on the deeds, they can potentially benefit from the arrangement. For example, these “income boosters” may opt to contribute to the monthly payments, building equity in the property that they can recoup in the future.

Alternatively, they can provide assistance if the buyer is struggling with refunds. Previously, parents often acted as guarantors for their adult children’s mortgages, but these new schemes offer more flexibility. For example, fintech mortgage lender Gen H has expanded eligibility to include nieces, nephews and friends as income boosters. Friends can act as income boosters on mortgages up to 80% loan-to-value (LTV), while nieces and nephews can be included on mortgages up to 95% LTV.

A survey of Gen H customers found that 62.4% are under 40, while 37.6% are over 40 and 16.4% are over 50. Gen H CEO Will Rice expressed his delight at the impact their revenue growth product is having. he had.

He said: “We have seen how many people our income growth product has been able to help. That’s why when our brokers started asking friends to act as income boosters, we took note. I’m delighted to bring this change to you, particularly in light of two consecutive rate cuts, as it means we’ll be able to support even more aspiring landlords. This important development is due to the attention and support of our broker partners.”

Justin Moy, Managing Director at EHF Mortgages, praised the innovation, telling Newspage: “Any innovation is great for the mortgage market and this extension of the Gen H policy will enable more buyers to afford their first or next properties by lowering the borrower common. and the path of sole ownership.”

However, he warned: “Those who help a borrower must beware of the impact on their own finances. After all, the mortgage will become a commitment to their own mortgage applications and will limit their own financial capacity. With a family older, it might not be such a problem, but if friends are of a similar age, it could create an awkward problem when they want to move or refinance.”

Stephen Perkins, Managing Director at Yellow Brick Mortgages, commented: “Anything that can help more people get on the housing ladder should be welcomed, but friends or family members concerned should keep their eyes wide open. a friend’s mortgage could potentially impact your own credit file and personal loan potential in the future.”

Michelle Lawson, director at Lawson Financial, described the Gen H deal as “a great piece of much-needed innovation”. However, she warned: “Buying a property is an expensive investment and not an easy way out in the event of friendship break-ups and changes in circumstances.”

Dariusz Karpowicz, director at Albion Financial Advice, urged other lenders to follow suit. “Extending income-growing options to friends and extended family is a smart way to fill a gap in the market, making home ownership more affordable for many,” he said.

“This approach is particularly useful for first-time buyers and those struggling with affordability, and its popularity is likely to grow over the coming years.”

Scott Taylor-Barr, Senior Advisor at Barnsdale Financial Management, noted: “JBSP is effectively a re-branding of the Guarantor mortgages we saw a decade ago. They’re incredibly useful when done right and allow family members to help each other buy a property, which can be invaluable for first-time buyers and those looking to buy after a break-up.”