NatWest has launched a joint borrower sole proprietor’ (JBSP) mortgage.
The lender's Family-Backed mortgage lets borrowers add a second person to the mortgage but without them owning the property.
Adding a second person to the mortgage as a 'non-owner' can help buyers borrow more than they would otherwise have been able to.
For example, a first-time buyer earning a £28,000 salary with a 10% deposit can borrow up to £124,450 through NatWest’s existing mortgage products. This example first-time buyer would have a budget ceiling of approximately £138,000 when looking to buy their first home.
With the new Family-Backed Mortgage however, this first-time buyer could add a family member or friend to the mortgage. For example, where the family member or friend earns £45,000, this arrangement would instantly increase the first-time buyer’s maximum borrowing potential to £246,000, giving them a property budget of approximately £273,000.
The mortgage is available to both first-time buyers and next-time buyers, and the non-owner can be a family member or friend.
NatWest requires a minimum income of £20,000 gross per annum for the main applicant owner/occupier, which can be made up of all acceptable income types.
In addition, the non-owning borrower must seek independent legal advice before completion. An Independent Legal Advice Certificate will be sent to the non-owning borrower with the mortgage offer, seeking confirmation legal advice has been obtained.
NatWest has also announced revised mortgage affordability rates, mirroring recent moves from HSBC and Lloyds Banking Group. The change in stress rates means that a typical family will be able to borrow up to £33,000 more.
Barry Connolly, managing director of home buying at NatWest, said: “We are committed to providing more pathways to homeownership and helping first-time buyers to achieve their goals.
“Today’s launch of the ‘Family-Backed’ mortgage boosts the borrowing power of prospective homeowners by enabling them to combine incomes with a family member or friend, while retaining independence to own a home in their own name.
“In addition, we also announce that we have revised our affordability rates for mortgage customers, boosting the borrowing potential of hundreds of thousands of potential homeowners, whilst continuing to ensure that they can afford their mortgage over the long term.
“We believe that this twin announcement can help instil hope amongst our customers that their dreams can be realised.”
